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Maximize Trading Potential In Butterfly Spread Option Strategy

The following guidelines will help you maximize your profit potential when you want to get involved in a butterfly option trading strategy:

Choose options with high implied volatility. Since the butterfly spread is targeted at making the most money from having the middle strike price, then high volatility means there is more time premium built into the premium of the options you are selling.

Select an underlying stock that is being traded in a price range with solid support and resistance points.

Try to sell options that are at-the-money or a little out-of-the-money. That strategy allows you a better chance of keeping the premiums from selling options.

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