Question 1

What is a Long Call Broken-Wing Butterfly?

Accepted Answer

You buy (long) one OTM Call, sell (short) two further OTM Calls, buy (long) one even further OTM Call that is closer to the sold OTM Calls than the first long OTM Call

Question 2

What is the max loss of a Long Call Broken-Wing Butterfly?

Accepted Answer

The max loss is Cost of the Long Call Broken-Wing Butterfly.

Question 3

When do I breakeven when utilizing a Long Call Broken-Wing Butterfly strategy?

Accepted Answer

The breakeven is defined as Lowest strike plus debit paid.

Question 4

What is the typical application of a Long Call Broken-Wing Butterfly?

Accepted Answer

The typical applicatio is: 1. Speculate on a precise increase in price with a margin for error on price overshooting and flat to decreasing volatility.