Iron Butterfly
Computes the outcome of an iron butterfly: selling a call and a put at the same central strike (the body) and buying a further-out call and put (the wings), collecting a net credit. It's a strong bet that the asset will finish right at the central strike, with a bigger credit than an iron condor but a narrower profit range. The tool returns the maximum profit, the maximum loss and the two breakeven points. Enter the central strike, the wing width and the credit received.
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Iron Butterfly
Computes the outcome of an iron butterfly: selling a call and a put at the same central strike (the body) and buying a further-out call and put (the wings), collecting a net credit. It's a strong bet that the asset will finish right at the central strike, with a bigger credit than an iron condor but a narrower profit range. The tool returns the maximum profit, the maximum loss and the two breakeven points. Enter the central strike, the wing width and the credit received.
A fat credit for betting nothing moves
The iron butterfly is the iron condor's more aggressive cousin. Instead of leaving a wide band in the middle, it sells the call and the put at the same central strike, gluing the two short legs together. That increases the credit received but narrows the profit zone: you need the asset to finish right near that central point to keep the money.
The bought wings, further out, cap the loss if the asset escapes. The maximum profit is the credit, won if everything expires at the body. The maximum loss is the wing width minus that credit. It's the strategy for someone with strong conviction of low volatility who wants to maximize the premium, accepting a smaller margin for error than the condor's.
Enter the central strike, the wing width and the net credit received when setting up the position. The tool returns the maximum profit, the maximum loss and the two breakeven points. Since the gain requires precision about the central point, it's worth comparing the credit with the potential loss before entering.
Related Tools
Iron Condor
Computes the outcome of an iron condor: selling a put spread and a call spread at the same time, collecting a net credit. It's the classic strategy for betting the asset will trade sideways while pocketing the premium with limited risk. The tool uses the credit received and the four strikes to return the maximum profit (the credit itself), the maximum loss and the two breakeven points. Enter the four strikes and the net credit received.
Long Strangle
Computes the cost and breakevens of a long strangle: buying a lower-strike put and a higher-strike call, both out of the money. It's a cheaper volatility bet than the straddle, because out-of-the-money premiums cost less — in exchange, the asset has to move further to turn a profit. The tool sums the premiums and works out the two breakeven points. Enter the put and call strikes and their premiums.
Bull Put Spread
Computes the outcome of a bull put spread: selling a higher-strike put and buying a lower-strike put, collecting a credit. It's a bullish (or neutral) bet that pockets the premium with risk capped by the bought put. The tool returns the credit received (maximum profit), the maximum loss and the breakeven. Enter the two strikes and the respective put premiums.
The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.