what is an iron butterfly 
an iron butterfly is an options trade that uses four different contracts as part of a strategy to benefit from stocks or futures prices that move within a defined range the trade is also constructed to benefit from a decline in implied volatility the key to using this trade as part of a successful trading strategy is forecast a time when option prices are likely to decline in value generally this usually occurs during periods of sideways movement or a mild upward trend the trade is also known by the nickname iron fly 