The Long Iron Butterfly is a four leg neutral options strategy constructed by combining a Bull Call Spread and a Bear Put Spread into one single position. This position is placed by the trader who expects a movement in price but is unsure of the direction. The trade is created by buying an at-the-money (referred to as the body) call and put. The wings of the trade are created by selling an out of the money call and put at an equal distance away from the body. The maximum profit is obtained if the underlying stock price exceeds the strike price of the wings at expiration.
