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Derivatives




Iron Butterfly


An option trading strategy which involves buying a straddle and selling an out-of-the-money strangle on the same underlying. The order is entered in the following sequence: a put is sold, a put and a call are bought at a higher strike, and then a higher-strike call is sold.

Neither of the strikes needs to be consecutive nor the gaps between them need to be of equal distance.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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