The short put butterfly strategy has a setup selling 2 put options, 1 in the money and 1 out the money, while purchasing 2 at the money put options with the same strike price. This strategy is just like the short call butterfly, but with puts. This strategy has limited upside and also limited risk, this strategy is unique has it can profit while the stock goes up or down, but max risk is if stock stays at the strike of the 2 long put options. The max profit is the net credit received.
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Option Contracts
Short Put
Long Put (x2)
Short Put
Equity - Long
100 shares
Estimated Returns
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