What is reverse iron butterfly  in option market?

Reverse lron Butterfly

The reverse iron butterfly is the opposite of an iron butterfly and is the iron counterpart to the short butterfly spread. A reverse iron butterfly combines both call and put option to create a payout that is identical to the soft butterfly.The reverse iron butterfly starts out with a long straddle and then the wings out of the money options are sold. At this level the profit has matched the maximum potential payout.

Reverse iron butterfly with example

The XYZ 45/ 50/55 reverse iron butterfly, unlike the short butterfly spreads created with all similar options is actually initiated with a debit or cost instead of a credit. The reverse iron butterfly would come at the cost of the Jain 50 put and call would be purchased forthe jan 50 put and call would be purchased for total cost of 4.55 (2.25 + 2.30)and the Jain 45 foot and Jain 55 call would be sold for a credit of 1.20 (0. 50 +0. 70).

The maximum potential loss with this spirit is limited to the capital outlay to enter the spirit or at any level from 45 down or 55 and hire the spirit has a value of 5 but the cost of the spirit was 3.35at any level from 45 down or 55 And higher the spread has a value of 5 but the cost of the spirit was 3.35 show the net profit is limited to AVN 55 only the long 50 call and short 55 call option are in the money. The 50 cal will have 5 more in value then the 55 call.on the other end of the spectrum with x-y-z below 45 at expiration the long 50 put and short 25 put options will have value with the 50 strike put having five more value than the 45 put.

The break-even level for this is sprayed are determined by adding and subtracting the cost of the street from the entire stock price. To the top site desperate is a profit anywhere over 53.35. On the downside it has value once 46.65 has been crossed.