If you’re tired of high-risk trades that tie up a lot of capital, butterfly spreads can be a great alternative. They’re a low-cost way to take a shot at a directional move or market idea without risking much upfront.
If you’ve been using iron condors, which often require a large amount of capital for relatively small returns, butterflies offer the opposite: you risk less in hopes of a bigger payoff. While the probabilities of winning are lower, I’ll show you how to still come out ahead by creating trades with positive expectancy.