RISK REVERSAL	IRON BUTTERFLY
About Strategy	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod Read more..	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..

RISK REVERSAL Vs IRON BUTTERFLY - Details

	RISK REVERSAL	IRON BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	4
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Premium received - Put Strike Price	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

RISK REVERSAL Vs IRON BUTTERFLY - When & How to use ?

	RISK REVERSAL	IRON BUTTERFLY
Market View	Bullish	Neutral
When to use?	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.	This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Premium received - Put Strike Price	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

RISK REVERSAL Vs IRON BUTTERFLY - Risk & Reward

	RISK REVERSAL	IRON BUTTERFLY
Maximum Profit Scenario	You have unlimited profit potential to the upside.	Net Premium Received - Commissions Paid
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk	Unlimited	Limited
Reward	Unlimited	Limited

RISK REVERSAL Vs IRON BUTTERFLY - Strategy Pros & Cons

	RISK REVERSAL	IRON BUTTERFLY
Similar Strategies	-	Long Put Butterfly, Neutral Calendar Spread
Disadvantage	Unlimited Risk.	• Large commissions involved. • Probability of losses are higher.
Advantages	Unlimited profit.	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.