formulae for different options- butterfly spread,straddle

CFA Level III Derivatives
#1

Is there anyway to understand the formula especially for max profit or max loss for all those butterfly spread, bull spread an so on?

or the only option is learning by rote?

I always forget as there are many

#2

There really is no need to learn the formula. Just draw out the graph (not on the answer section) and you can work out what is long and short with which strikes come first.

#3

Thanks, let me try

#4

Saurabh, at the end of the day all these option strategies are a combination of long and short, calls and puts.

If you can identify what the components of straddle is and what a butterfly is(hint its only a combination of calls and puts), then you can calculate payoff/profit etc.