Call butterfly vs put butterfly - what's the difference?

They have essentially the same payoff profile when using the same strikes. Call butterflies are synthetically equivalent to put butterflies at the same strikes. Choose based on liquidity and bid-ask spreads.

When should I use a butterfly vs an iron condor?

Butterflies are better when you have a specific price target. Iron condors are better when you expect the stock to stay within a broader range. Butterflies have higher max profit potential but a narrower profit zone.

How does time decay affect a butterfly?

If the stock is near the middle strike, theta helps you as the short options decay faster than the longs. If the stock is away from the middle strike, time decay hurts as your position loses value.

Butterfly Spread Calculator

A butterfly spread is a neutral strategy that profits when the stock stays near a specific price at expiration. It combines two spreads to create a position with limited risk and limited reward.

A long call butterfly involves buying one call at a lower strike, selling two calls at a middle strike, and buying one call at a higher strike. The wing strikes are equidistant from the middle.

A long butterfly has a defined premium-at-risk, but can lose all of it if the stock finishes outside the wings. Its narrow profit region makes the chosen strikes and entry debit important.

Hypothetical example: SPY at $585. Premiums and IVs are illustrative inputs, not current quotes. Dates roll forward for the demo. Results exclude fees and assignment effects.

Max Profit$910

Max Loss$90

Net Debit$90.00

Breakeven$575.90, $594.10

Avg IV19.0%

Action	Type	Strike	Exp	Premium	Qty	Delta	Gamma	Theta	Vega
buy	call	$575	Oct 16	$15.50	1	65.4	1.07	-22.60	66.82
sell	call	$585	Oct 16	$10.20	2	-108.2	-2.31	46.46	-143.77
buy	call	$595	Oct 16	$5.80	1	42.6	1.14	-22.23	71.04
Net						-0.1	-0.09	+1.63	-5.91

Time

Exp

Sep 11(35d)

Build your own Butterfly Spread

When to Use

You have a specific price target for expiration
You expect low volatility / range-bound trading
You want defined risk with low capital outlay
You have compared the net debit and individual strike IVs; high IV alone does not guarantee a cheaper spread

Risk Profile

At expiration, before fees. Arithmetic examples below use their stated inputs, separately from the interactive model above.

Maximum ProfitWidth of wing minus net debit paid

Maximum LossNet debit paid

BreakevenTwo points: lower strike + debit, upper strike - debit

How to Build a Butterfly Spread

1Enter the stock ticker and select an expiration
2Identify your target price (the middle strike)
3Buy 1 call at a lower strike, sell 2 at the middle, buy 1 at a higher strike
4Ensure wing widths are equal for a balanced butterfly
5Review the payoff diagram to see the profit zone

Frequently Asked Questions

Maximum profit occurs when the stock expires exactly at the middle strike. The profit equals the wing width minus the net debit. For example, with $5 wings and a $1 debit, max profit is $4 per share ($400 per butterfly).

Learn More

What Is A Vertical Spread Understanding Options Greeks Iron Condor Strategy Guide

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