Long Put Butterfly Options Strategy, Profiting from Little or No Movement

The Long Put Butterfly is an equity options strategy that can prove profitable when a trader has a neutral outlook and can correctly anticipate where a stock's price will finish at a specific time. The Long Put Butterfly’s low risk/reward ratio (profit potential is greater than risk) can entice options traders to this formidable challenge.
The Long Put Butterfly is a multi-strike put, limited risk, limited profit potential, advanced options strategy that takes advantage of a drop in volatility, time decay, and little to no price movement in the underlying security.
The Long Put Butterfly combines a bull put spread and a bear put spread where the two puts are sold at the same strike. One long put is purchased above the strike of the short puts, and one long put is purchased below the strike of the short puts, with all legs having the same expiration date. In this strategy, your risk is limited to the premium paid, while your reward is limited to the difference between the higher strikes and the premium paid-the strategy profits during low volatility, sideways markets.
Join John Rowland, Barchart's Head of Trading Education, as he helps you understand the mechanics of the Long Put Butterfly strategy. John demonstrates how to use Barchart's Long Put Butterfly options screener and provides insights into which candidates could have a greater probability of success.
In this webinar, you will learn about:
- The impact of time decay and volatility on the strategy
- The cost-benefit analysis of strike selection and chart analysis
- Strategy risks
- Exit strategies
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