An Inverted Butterfly Spread is a bi-directional option strategy that a trader can use when they believe a stock price will move up or down a significant amount, but determining which direction the price action will break is unclear. Consolidation patterns like symmetrical triangles or a scheduled earnings announcement are commonly identified as bi-directional trading opportunities that can be highly effective for placing an inverted butterfly spread.
A profit will materialize if the stock moves up or down into the profit zones. A loss will occur if a stock stays in the middle of the range.
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Example
