In a protracted butterfly, the center strike choice is offered and the outdoor moves are sold in a ratio of 1:2:1 (purchase one, promote , purchase one). Options Trading If this ratio does now no longer hold, it isn't a butterfly. The outdoor moves are typically called the wings of the butterfly, and the internal strike because the body. The price of a butterfly can in no way fall beneath zero. Closely associated with the butterfly is the condor—the distinction is that the center alternatives aren't on the identical strike rate. Options Frequently Asked Questions What are alternatives? Options are derivatives that provide their holders the proper—however now no longer the obligation—to shop for or promote an asset at a said rate inside a selected time frame. Options Trading Options contracts typically constitute one hundred stocks of an underlying protection.
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