In this Option Trading Lab, we cover the Butterfly Spread and compare it to the calendar spread or horizontal spread as it is sometimes called. In option trading, we have the ability to pair together different options to give us the trading risk and reward we desire on every option trade we make. We start at identifying the correct stock chart for a Butterfly Spread, getting our timeframe, entry, target and our abandon or adjust points. Then, we start at identifying the correct stock chart for a Calendar Spread (horizontal spread), getting our timeframe, entry, target and our abandon or adjust points. We then go into the risk graphing software and build out both option trades and analyze the risk graphs and compare. While the Butterfly spread and Calendar Spread are similar, they are affected differently by volatility.
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