I'm looking at the iron butterfly, and pricing vs. the butterfly, and something is telling me the iron is too good to be true. Aside from lower commissions (from what I understand), what benefit does the butterfly have over the iron version? It just seems you're getting paid for a strategy that has very limited risk, and large profit potential... I know I'm missing something. thanks
At the same strike prices the two are synthetically equivalent so there's no benefit to one over the other.
A butterfly has 4 options on it, and the iron butterfly has 4 options in it so it will not be any cheaper on commissions. Prices are almost exactly the same also on both types of spreads. Iron butterflies just give you an easier way to adjust a trade that is moving out of one of your breakevens
thanks again, i'm showing my noobness... i guess it's a good thing I ask before I trade! the page I read was way off then... http://www.optiontradingpedia.com/free_iron_butterfly_spread.htm there's a summary on that page... that states the iron is the "highest max (potential) profit".
Yes... I was disappointed when I found this thread actually discussing trading instead of our apparent mutual memories. An "In-A-Gadda-Da-Vida" to you as well, peace and good trading.