The differences between a butterfly and an iron butterfly

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Discussion Question :

Construct an Iron Butterfly strategy using a table and draw the profit-loss diagram. An Iron Butterfly requires that one buy an OTM put with X1 , sell another ATM put with X2 , sell an ATM call with X2 , and buy an OTM call with X3 . X1 , X2 , and X3 are evenly spaced.

Explain what are the similarities and differences between a Butterfly and an Iron Butterfly.

Reference no: EM132261832

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