Butterfly Spread

[ebb]

Just wanted to double check something.

In the curriculum for GARP, Butterfly Spread is described with long two calls and write two calls between or the same thing with puts.

However, isn't it more logical and easier to imagine it simply as a short straddle with both sides covered with a long call on the upper side and the long put on the lower side? That's how I remember it from b-school.

 

[Dmitrij]

I typically remember it as:

1-2-1, where the edges are long and the middle is short, or the around way around, depending on whether you want to long or short it.

 

[ebb]

Yah. That's exactly how I remember it too. There's just multiple ways of doing it.

I just thought the method I illustrated is easier to comprehend and I'm surprised that it is no the standard way the curriculum would teach it.