A Short Call Butterfly is constructed with the following options:

• Long 2 ATM (At-The-Money) Call Options
• Short 1 ITM (In-The-Money) Call Option
• Short 1 OTM (Out-Of-The-Money) Call Option

The Short Call Butterfly is designed for volatile markets, representing the opposite of the Long Call Butterfly, which is a strategy suited for range-bound scenarios. This strategy involves selling one lower striking in-the-money Call, buying two at-the-money Calls, and selling another higher strike out-of-the-money Call. As a result, the investor receives a net credit, making it an income strategy. The strike prices should be equally spaced.

The position becomes profitable in the event of a significant move in the stock or index. The maximum risk occurs if the stock or index is at the middle strike at expiration. The maximum profit is achieved if the stock finishes on either side of the upper and lower strike prices at expiration. However, it's important to note that this strategy offers relatively small returns compared to straddles or strangles, with only slightly less risk.