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In finance, a butterfly is a limited risk, non-directional options strategy that is designed to have a high probability of earning a limited profit when the future volatility of the underlying asset is expected to be lower or higher than the implied volatility when long or short respectively. Call and put spreads. Any spread that is constructed using calls can be referred to as a call spread, while a put spread is constructed using put options.. Bull and bear spreads. If a spread is designed to profit from a rise in the price of the underlying security, it is a bull spread.
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If you know how options work, and how to use them appropriately, you can have a real advantage in the market. Most importantly, options can allow you to put the odds in your favor. InvestorWords - The Most Comprehensive Investing Glossary on the Web! Over financial and investing definitions, with links between related terms.
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