Ready Made Options Strategies - Short Put Butterfly
Short Put Butterfly is employed when the Option Trader is Neutral on the price of the underlying security but very bullish on the volatility.
In this Strategy:
Sell 1 ITM (In the Money) Put
Buy 2 ATM (At the Money) Puts
Sell 1 OTM (Out of the Money) Put
Maximum profit is attained for the short put butterfly when the underlying stock price rally pass the higher strike price or drops below the lower strike price at expiration.