Unbalanced Butterfly

An type of butterfly that is made up of one long vertical and two short verticals with all of the shorts being at the same strike. Also referred to as a “132” sometimes due to the number of options at each strike.

SPX calls
+2 4050
-3 4025
+1 4000

Ther is a long vertical at 4000/4025 and two short verticals at 4025/4050

Unbalanced butterflies can often be placed for credits due to the nature of selling twice as many verticals as are being bought. The trade can be done strictly as a credit collection vehicle or as a directional trade. Unbalanced butterflies are most effective when time to expiry is short as you are then leveraging the high number of short strikes whose total premium decays much faster than your one long strike.