The Iron Butterfly is an options trading strategy that involves using both calls and puts with the same expiration date but different strike prices. It's a neutral strategy designed to profit when the underlying asset's price remains within a specific range.

Here's how you can set up an Iron Butterfly:

1. Components:
   • Sell an at-the-money (ATM) call option.
   • Sell an ATM put option.
   • Buy a higher strike call option (out-of-the-money, or OTM).
   • Buy a lower strike put option (also OTM).
2. Strike Prices:
   • The call and put options you sell should have the same strike price, usually at or very close to the current market price of the underlying asset.
   • The call and put options you buy should have the same strike price, and it should be equidistant from the strike price of the options you sold.
3. Expiration Date:
   • All options should have the same expiration date.
4. Risk and Reward:
   • The goal of the Iron Butterfly is to profit from low volatility. The maximum loss occurs if the price of the underlying asset moves significantly beyond the strike prices of the options you bought.
   • The maximum profit is achieved if the price of the underlying asset closes at the strike price of the options you sold.
5. Profit and Loss Calculation:
   • Maximum loss and maximum profit can be calculated based on the net premium received or paid for the options.
6. Breakeven Points:
   • There are two breakeven points in an Iron Butterfly:
     • Upper Breakeven: It's the strike price of the call option you sold plus the net premium received.
     • Lower Breakeven: It's the strike price of the put option you sold minus the net premium received.

The Iron Butterfly is a strategy for traders who expect low volatility in the underlying asset. It profits from a relatively stable market where the price of the asset stays within a specific range. Keep in mind that options trading involves risks, and it's important to fully understand the strategy and its potential outcomes before implementing it. If you're new to options trading, consider paper trading or consulting with a financial advisor.