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Strategies & Market Trends : Option Spreads, Credit my Debit
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To: jjs_ynot who wrote (534)2/14/1999 8:30:00 PM
From: KFE  Read Replies (1) of 2317
 
Dave,
The butterfly spread I am referring to is shorting two options of the same strike price and buying one option above and below the short strike price at equal increments. Your maximum gain would be for the stock to finish at the short option strike price. The maximum risk would be for the amount of debit created (barring early exercise).

In the early days of options if you were quick it was possible once in a while to put the trade on for a net credit thus guaranteeing a profit if not exercised early. I guess free lunch is gone.

Ken
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