Gold/USD

A "bullish butterfly" is a trading strategy used in the financial markets, particularly in options trading. It's a complex strategy that involves buying and selling multiple options contracts with the aim of profiting from a specific market outlook.

In a bullish butterfly, the trader expects the price of the underlying asset to increase moderately. The strategy typically involves buying one call option with a lower strike price, selling two call options with a higher strike price, and buying another call option with an even higher strike price. The options all have the same expiration date.

The payoff diagram of a bullish butterfly resembles the shape of a butterfly, with potential profit if the price of the underlying asset remains within a certain range upon expiration. The maximum profit is achieved if the price of the underlying asset is equal to the middle strike price at expiration, while the maximum loss is limited to the initial cost of setting up the strategy.

Traders may use a bullish butterfly when they anticipate a moderate increase in the price of the underlying asset, but with limited risk exposure. However, it's important to note that options trading can be complex and involves significant risks, so traders should thoroughly understand the strategy before implementing it.
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