FxWirePro: USD/CAD remains in narrow range on the verge of Fed’s meet - Vega suggests long iron butterfly for complacent bulls

Loonie has remained in narrow range between 1.3325 - 1.3125 on the verge of Fed's big event loonie eying on gains, bears of USDCAD began trimming gains as RSI showing divergence to the USDCAD uptrend. So if anyone believes it can still be possible to pull out returns in this narrow range from this pair, even though exhausted bulls who think long lasting non-stop streak of bull run to take halt at this point. Yes, that's quite achievable from iron butterfly strategy.

To execute this strategy, the hedger goes long on a lower strike Out-Of-The-Money put and shorts At-The-Money Put simultaneously short again on At-The-Money call and long on Out-Of-The-Money call, this results in a net credit to put on the trade.
Iron Butterfly (USD/CAD) = Long 2D (0.75%) OTM -0.25 delta Put (strike at around 1.3155) & Short ATM Put + Short ATM Call & Long 2D (0.65%) OTM 0.25 delta call (strike at around 1.3325)

Vega on Long OTM call was at 31.84, while vega on long OTM put was at 28.97. Usually if the Vega of a long option position is positive and the implied volatility rises or dips, the above stated option prices are directly proportional to the implied volatility. So in this case Vega both on long position is reasonably acceptable. It is desirable that at maturity the underlying exchange rate of USD/CAD to remain near short strikes in order to achieve highest returns.