How is Butterfly Trade Strategy good if the mid Strike price is already past?
How do you make money on butterfly spread?
The formula for calculating maximum profit is given below:
- Max Profit = Strike Price of Short Call – Strike Price of Lower Strike Long Call – Net Premium Paid – Commissions Paid.
- Max Profit Achieved When Price of Underlying = Strike Price of Short Calls.
How do you know if an option is overpriced?
Quote: We can still make money when implied volatility is low we just want to scale down our size a lot just to compensate for that less of an edge that we have in those options.