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The butterfly (or butterfly spread) is a neutral options strategy that is a combination of a bull spread and a bear spread. It is structured by three options with different strikes. When you expect the underlying to trade in range you should use the long butterfly, which is constructed by buying one in the money call with lower strike, selling two at the money calls and buying another out of the money call with higher strike. Maximum profit and loss are limited. This strategy also has a variation that is popular and is called iron butterfly. It is structured by selling at the money put and call options and buying another put and call options that are out of the money.

P&L at expiry