A bearish butterfly is an advanced options trading strategy designed to profit from a moderate decline in the underlying asset's price. It involves:
1. **Selling one In-the-Money (ITM) call option.** 2. **Buying two At-the-Money (ATM) call options.** 3. **Selling one Out-of-the-Money (OTM) call option.**
Key Points
- **Net Debit:** Typically results in a net debit, meaning an upfront cost to enter the trade. - **Profit Potential:** Maximum profit occurs if the stock price closes at the strike price of the ITM call at expiration. - **Risk:** Maximum loss is capped and known in advance. - **Complexity:** More complex than basic options strategies, requiring careful planning.
Advantages - Limited risk with defined maximum loss. - Designed to profit from a moderate decline in the underlying asset's price. - Clearly defined profit and loss outcomes.
Disadvantages - Requires an initial debit, which can be significant. - Limited profit potential. - More complex and suitable for experienced traders.
In summary, the bearish butterfly strategy is suitable for experienced traders expecting a moderate decline in the underlying asset, offering limited risk and predictable outcomes.
Thông tin và ấn phẩm không có nghĩa là và không cấu thành, tài chính, đầu tư, kinh doanh, hoặc các loại lời khuyên hoặc khuyến nghị khác được cung cấp hoặc xác nhận bởi TradingView. Đọc thêm trong Điều khoản sử dụng.