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Bullish Patterns
Long Calls
Bull Call Spread
Bull Put Spread
Call Backspread
Long Call Ratio Spread
Naked Put
Synthetic Long Stock
The Collar
Covered Calls
Synthetic Long Call
Synthetic Short Put
Covered Straddle
Covered Strangle
Married Put
Protective Put

Bearish Patterns
Long Puts
Bear Put Spread
Bear Call Spread
Put Backspread
Long Put Ratio Spread
Naked Calls
Synthetic Short Stock
Synthetic Short Stock (split strikes)
Covered Put
Protective Call
Synthetic Short Call
Synthetic Long Put

Long Volatility
Long Straddle
Long Strangle
Short Call Butterfly
Short Put Butterfly
Short Iron Butterfly
Short Call Condor
Short Put Condor
Short Iron Condor
Long Guts
Strip
Strap
Short Call Ladder
Short Put Ladder
Long Call Synthetic Straddle
Long Put Synthetic Straddle

Short Volatility
Short Straddle
Short Strangle
Long Call Butterfly
Long Put Butterfly
Long Iron Butterfly
Long Call Condor
Long Put Condor
Long Iron Condor
Short Guts
Long Call Ladder
Long Put Ladder
Call Ratio Spread
Short Call Ratio Spread
Put Ratio Spread
Short Put Ratio Spread
Ratio Call Write
Ratio Put Write
Short Call Synthetic Straddle
Short Put Synthetic Straddle
Variable Ratio Write

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Long Call Butterfly

Risk: low
Reward: low

General Description
Entering a long call butterfly entails buying (1) lower strike call, selling (2) middle strike calls and buying (1) higher strike call (same expiration month, strikes are equal distance). It's essentially a combination of a lower strike bull call spread and a higher strike bear call spread, and it's similar to a long call condor except the short calls use the same strike.

(draw a long call butterfly risk diagram here)

The Thinking
You're confident a stock will trade in a tight range and not move much from its current position. You employ a lower strike bull call spread, which achieves max profitability when the underlying rallies, and a higher strike bear call spread, which achieves max profitability when the underlying drops. If you're correct, if the stock doesn't stray too far from the middle strike, you'll make money on both legs of the overall strategy.

Example
XYZ is at $55.00, and you're fairly certain the stock won't move much. You buy (1) 50 call for $6.00, sell (2) 55 calls for $3.00 each and buy (1) 60 call for $1.00. The net debit is $1.00.

Below the lowest strike, all calls expire worthless, and your loss is the net debit paid when the trade was initiated.

Above the highest strike, all calls are in-the-money and exactly cancel each other out. Your loss is the net debit paid when the trade was initiated. For example, if the stock is at $65, the 50 call will be worth $15 ($9.00 profit), the 55 calls will be worth $10 ($7.00 loss per contract) and the 60 call will be worth $5 ($4.00 profit). The net of this is a $1.00 loss.

At $55 (middle strike), max profitability is achieved. The 50 call will be worth $5 ($1.00 loss), the 55 calls will be worthless ($3.00 profit per contract) and the 60 call will be worthless ($1.00 loss). The net of this is a $4.00 profit.

The PL chart below graphically shows where this trade will be profitable and at a loss.