What is a bearish butterfly?

A bearish butterfly can be opened using put option contracts or call option contracts for a similar risk to return ratio. This is a bearish option play profting if price stays above a specific price level. It is a complex strategy requiring an understanding of option theta, delta, and gamma for risk management.

What is the bearish butterfly option play?

The bearish butterfly option play, (not to be confused with the bearish butterfly chart pattern) is an adjusted butterfly option spread which is a neutral options trading play that is structured to profit from bearish price action. Option traders create this option play when they have bearish signals on a chart pointing to the market going lower.

What is the butterfly pattern?

The Butterfly Pattern uses the identification of quantified structures on a chart that has specific and sequential Fibonacci ratio alignments that show harmonic patterns. These patterns calculate and measure the Fibonacci aspects of the price action structures to signal reversal points with good odds of success.

What is a butterfly reversal pattern?

The trading and investing signals are provided for education purposes and if you use them with real money, you do so at your own risk. The Butterfly pattern is a reversal pattern composed of four legs, similar to the Gartley and Bat pattern, marked X-A, A-B, B-C and C-D. It helps you identify when a current price move is likely approaching its end.