Task: Class Definition Understanding (ontology: Business_Finance/Financial_Industry_Business_Ontology)

Which of the following definitions best describes 'butterfly'?

A. strategy that combines bull and bear spreads with a fixed risk and capped profit
B. non-directional options strategy that limits both gains and losses while seeking to profit from either low or high volatility
C. neutral option trading strategy that involves simultaneously buying both a put option and a call option for the underlying security with the same strike price and the same expiration date
D. option trading strategy that involves buying a downside put and selling an upside call that is implemented to protect against large losses, but which also limits large upside gains

Answer: strategy that combines bull and bear spreads with a fixed risk and capped profit