How does the short call butterfly spread strategy work in the context of digital currencies?

1 answers

• Nov 23, 2021 · 3 years ago
  The short call butterfly spread strategy is a popular options trading strategy that can be applied to digital currencies. It involves selling two call options at a middle strike price and buying one call option each at a higher and lower strike price. This strategy allows traders to profit from a limited range of price movement in digital currencies. The maximum profit is achieved when the price of the underlying digital currency is at the middle strike price at expiration. However, it is important to note that this strategy also comes with limited risk, as the potential loss is limited to the initial cost of setting up the spread. Traders should carefully consider market conditions and conduct thorough analysis before implementing this strategy in the context of digital currencies.
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