IRON BUTTERFLY	RISK REVERSAL
About Strategy	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 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 Vs RISK REVERSAL - Details

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

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

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

IRON BUTTERFLY Vs RISK REVERSAL - Risk & Reward

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

IRON BUTTERFLY Vs RISK REVERSAL - Strategy Pros & Cons

	IRON BUTTERFLY	RISK REVERSAL
Similar Strategies	Long Put Butterfly, Neutral Calendar Spread	-
Disadvantage	• Large commissions involved. • Probability of losses are higher.	Unlimited Risk.
Advantages	• 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.	Unlimited profit.