Learn to trade options: Creating a butterfly put strategy

A butterfly put is a debit option strategy in which a trader sells two put options at a specific strike price, while simultaneously buying one put option below the short strike price, and buying one put option above the short strike price with the same strike distance between the lower strike and short strike. The two short put options and two long put options must have the same expiration. This strategy is ideal for experienced traders who want to minimize their risk if the stock were to rise or drop significantly. In addition, the profit potential is high since there's a low cost required to enter the strategy. Finally, unlike some strategies, the maximum loss and maximum profit can be accurately estimated. At expiration, you want the stock to close at the strike price of the two short put options. In this video, we'll explain how to construct a butterfly put strategy in Questrade IQ, and how to calculate your potential profit using a detailed example. Sign up for a free practice account http://www.questrade.com/platforms/free_trial.aspx Open an account http://www.questrade.com/account/online.aspx. Questrade Advantage Sign-up for the Questrade Advantage to trade single- and multi-leg options for only $6.95 + 75 cents per contract. Learn more about butterfly puts http://help.questrade.com/how-to/iq-edge/stock-and-option-quotes/options/option-strategies/butterfly-put

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