| One trading strategy I love to use - both in my personal trading and in Daily Profits Live - is called the "Butterfly Trade." Some of my best Butterfly Trades this year have handed me top gains of 219.38% on Nvidia (Nasdaq: NVDA) in seven days, 113.38% on MicroStrategy (Nasdaq: MSTR) in 22 days and 107.32% on ServiceNow (NYSE: NOW) in two days. But I must be clear on one thing... This trading strategy is NOT for beginners. It involves a complex setup that could easily confuse and overwhelm those who haven't traded options before. Once you understand the nuances of it, though, you'll find it has several big-time benefits... one of which is the ability to profit from minor price movements while also limiting downside risk. I'm going to lay out exactly how to execute a Butterfly Trade in just a moment. But before I do that, it's important you understand the big picture of how Butterfly Trades work. Butterfly Trades 101 A Butterfly Trade is a multifaceted trade that involves four options contracts with the same expiration date. Think of a Butterfly Trade as a tightrope walk. The goal is to balance on a "narrow rope" and make a profit by accurately predicting where an asset's price is headed next. There are two types of Butterfly Trades: "at the money" (ATM) and "out of the money" (OTM). With an ATM Butterfly Trade, you are betting on the underlying asset staying at or near its current price. This would be a type of premium-collection strategy. With an OTM Butterfly Trade, you are betting on the underlying asset moving to a specific price. There's more movement in this type of Butterfly Trade, and the risk-reward ratio is much higher. Now let's take a look at how to actually structure a Butterfly Trade. What a Butterfly Trade Can Look Like As you'll see below, Butterfly Trades are made up of three parts: a body, a "lower wing" and a "higher wing." The two wings are your counterweights, helping you stay steady. If the price of the underlying asset deviates too much from your target price, you might lose your balance, leading to a smaller profit or a loss. Here are the three components of a Butterfly Trade: - Sell two calls whose strike price is your target price for the stock. These are the "body" of the butterfly. If you think the stock's price is not going to move much, they will be two ATM options. If you think the stock is going to move up, they will be two OTM options because their strike price will be the price you're expecting the stock to reach.
- Buy a call with a lower strike price. This is the "lower wing" of the butterfly. This call will have a strike price that's lower than your target price for the stock. If you're selling two ATM calls (i.e., you think the stock's price isn't going to move much), this call will be in the money, or ITM. If you're selling two OTM calls (i.e., you think the stock's price will move up), this call will be either ATM or only slightly OTM.
- Buy a call with a higher strike price. This is the "higher wing" of the butterfly. This call will have a strike price that's higher than your target price for the stock. If you're selling two ATM calls (i.e., you think the stock's price isn't going to move much), this call will be OTM. If you're selling two OTM calls (i.e., you think the stock's price will move up), this call will be even further OTM.
Now, here's how this trade works when it's put into action. | 
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