This structure can simply be described as tying off the open ended risk involved in a Put spread 1x2.

In the Put spread 1x2 example of the 125/100 Put 1x2, we would just buy an additional Put below our 2 short 100 Puts. Any strike below it would work, but let’s keep it equidistant for discussion and do the 125/100/75 Put Butterfly. The end structure would be long 1x the 125 Put/short 2x the 100 Put/long 1x the 75 Put.

The Max profit is same as that of a Put spread, the Strike differential less the premium paid for the structure. By adding the Lower Put, the Max Loss is now limited to the Premium paid for the Butterfly. The great thing about the equidistant Put Fly is it is usually very cheap to purchase.

The bad things are that is doesn’t usually pick up in price until expiration nears and it is very hard to pick an exact target price.

If you buy a 125/100/75 Put Fly for $5, your break evens are 80 to 120. That is a nice wide landing zone, but if the market lands outside of 80 to 120, you start losing your premium paid.

Equidistant Flies are great starter trades.

and here is what the expiration Profit and Loss graph looks like;

Throughout the learning section I will advise you to manually do an expiration Profit & Loss table. This allows you to visualize exactly what it is that you are doing and is something all beginner traders do to start learning about strategies.

YOu then just need to work out each individual leg profit and loss then net it out in a graph