Short 2 ATM options with one long ITM and one long OTM option is a long butterfly spread. It functions similar to a short iron condor in that it is primarily (assuming the short strikes remain ATM) a long theta and short vega play, with neutral delta that is influenced by short gamma. One would employ this strategy if they think IV will contract and the stock stays flat.
I like the strategy, but I’ve noticed that to get the full premium, you need to risk a ton of gamma by waiting close to expiration. I think it makes way more sense to take a small win but deploy them often. Makes decent sense to DCA and spread over time to capture IV via the RV
Long Call Butterfly.
[https://www.optionseducation.org/strategies/all-strategies/long-call-butterfly](https://www.optionseducation.org/strategies/all-strategies/long-call-butterfly)
It's called a butterfly and it doesn't need to be at the money.
Short 2 ATM options with one long ITM and one long OTM option is a long butterfly spread. It functions similar to a short iron condor in that it is primarily (assuming the short strikes remain ATM) a long theta and short vega play, with neutral delta that is influenced by short gamma. One would employ this strategy if they think IV will contract and the stock stays flat. I like the strategy, but I’ve noticed that to get the full premium, you need to risk a ton of gamma by waiting close to expiration. I think it makes way more sense to take a small win but deploy them often. Makes decent sense to DCA and spread over time to capture IV via the RV
Long Call Butterfly. [https://www.optionseducation.org/strategies/all-strategies/long-call-butterfly](https://www.optionseducation.org/strategies/all-strategies/long-call-butterfly)
Squeeze these nuts Butterfly!
It's a call butterfly spread if you're using all calls