Butterfly Strategy

An option strategy utilizing both bear and bull spreads and this option creates a neutral effect.

By using all four option contracts, under the same expiration but three different strike prices, an investor creates a range of prices to profit from.  First, the investor sells two option contracts at the middle strike price.  Then he/she purchases one option contract a lower strike price and the final option at a higher strike price, thus covering all highs/lows.  Butterfly spreads can use both puts and calls.  Risk is limited, so the only loss would be the initial investment.