Exam Trap : Sandwich Spread

IF THEY ASK FOR THIS IM GONNA BE SO HAPPY LOL

what the sam heck is this?

I barely figured out the spread eagle strategy

From CFAi book , in a foot note

_ A short butterfly spread is sometimes called a sandwich spread. _

(Institute 392)

Institute, CFA. Level III 2013 Volume 5 Alternative Investments, Risk Management, and the Application of Derivatives. John Wiley & Sons P&T, 6/18/2012. .

so just the short side of of a Butterfly?

yip

dont forget calmar and sterling ratio

and strip and stack

can you tell me what or those 2? calmar and sertling? thanks

A short butterfly spread is essentially just a more complicated way to construct a straddle, right?

short butterfly your max gain is premium earned. Graph looks like a sandwhich.

Straddle also profits from higher vol but your profit max much higher (unlimited on upside)

i think…

well that would make sense, as a butterfly is usually a bet on low volatility. The short side would be a bet on long volatility.

Caveat, the payoff is different between the two.

Hope they don’t ask this right before lunch!

spread eagle is basically a reverse tight box spread

Dijon?

Another one - CIRCUS Swap.