Straddles are the most commonly traded interbank product bought and sold between market makers in the wholesale market. A straddle is a combination of a put and call at the same strike, either long, both or short both. The strike is almost always set at the at the money or ATM rate. Trading at the money straddles allows traders to trade implied volatility without leaving themselves with the delta position to tidy up. The graph shows the P&L profile of a long straddle in Euro dollar.

As you can see, this is a long straddle position where the trader has bought both the call and the put. This means paying twice the premium for a symmetric positive payoff if the spot rate goes up or down.

Butterflies and risk reversals are also commonly traded in the interbank market between market makers. Butterflies are a combination of a straddle and a strangle long one and short the other. They tend to be traded in vega neutral amounts, which requires a higher notional to be traded on the strangle. This gives the distinctive butterfly P&L profile you can see in the graph on the left.

Risk reversals are a combination of a put and a call both out the money long one and short the other. The P&L profile of a risk reversal position long the call and short the put can be seen in the graph on the right. Both butterflies and risk reversals allow traders to trade the shape of the volatility smile and skew. Butterflies are used to trade the smile element and risk reversals to trade the skew. As mentioned previously, the strikes of the out of the money options in both butterflies and risk reversals tend to be quoted in delta terms and not in absolute strikes. Therefore, you may see a 25 delta butterfly, which is a combination of an at the money straddle against a strangle who's put and call both have deltas of 25.