The Long Butterfly is an options strategy that consists of options with 3 different strikes being sold and purchased at the same time.

The strategy can be considered as an improved version of the Short Straddle, the improvement being that the maximum loss becomes limited and thus under full control.

The Long Butterfly can be constructed in a number of ways (using only calls, using only puts, or using both), and the resulting strategies differ primarily in being either credit or debit ones.

Below you can see an example of a debit Long Butterfly made of Call options.

Buy / Sell Quantity Call / Put / Stock Strike Days to Expiry Volatility, % Premium Debit / Credit  

Long Butterfly P/L Chart