What is a call Butterfly?

A call butterfly is a combination of a bull call debit spread and a bear call credit spread sold at the same strike price. The long call options are equidistant from the short call options. Entering a call butterfly will typically result in paying a small debit. The initial amount paid to enter the trade is the maximum defined risk.

Is a butterfly a moth?

butterfly, (superfamily Papilionoidea), any of numerous species of insects belonging to multiple families. Butterflies, along with the moths and the skippers, make up the insect order Lepidoptera. Butterflies are nearly worldwide in their distribution.

Are call butterflies market neutral?

Call butterflies are market neutral and have no directional bias. Call butterflies depend on minimal movement from the underlying stock to be profitable. For the position to reach maximum profit potential, the underlying stock price would need to close at the inside short strike prices at expiration.

What does collecting a butterfly mean?

"Collecting" means preserving dead specimens, not keeping butterflies as pets. Collecting butterflies was once a popular hobby; it has now largely been replaced by photography, recording, and rearing butterflies for release into the wild.