The reverse iron butterfly strategy is designed to take advantage of sharp swings in the underlying security, while still delivering a degree of risk management. Think of it as playing a straddle ...

For example, a company's stock is valued at $50.81. At that price a long iron butterfly could be created with the following contracts: Long 50 call @ 1.12 Long 50 put @ 0.40 Short 47.50 put @ 1.65 ...