What is the ideal outcome for a Butterfly Spread?
Maximum profit occurs when the underlying expires exactly at the middle strike. The position collects the full spread width minus the net premium paid.
A Butterfly Spread uses three strikes: buy one option at a lower strike, sell two options at a middle strike, and buy one option at a higher strike. It profits when the underlying stays near the middle strike at expiration.
Calculate This StrategyMaximum profit occurs when the underlying expires exactly at the middle strike. The position collects the full spread width minus the net premium paid.
A Butterfly Spread has two breakeven points: one below the middle strike and one above. These are calculated by adding and subtracting the net premium from the outer strikes.
Explore similar approaches and alternatives to find the best fit for your market outlook.
Similar market outlook or risk profile
Different ways to achieve similar or opposite goals
High volatility expected
A Long Straddle buys both a call and a put at the same strike and expiration. It profits from large price movements in either direction, regardless of which way the underlying moves.
High volatility expected
A Long Strangle buys an out-of-the-money call and an out-of-the-money put with the same expiration. It costs less than a straddle but requires a larger move to profit.
Easier strategies with fewer legs
Moderately bullish
A Bull Call Spread buys one call at a lower strike and sells one call at a higher strike with the same expiration. Both risk and profit potential are defined at entry, and the net cost is lower than buying a call outright.
Moderately bearish
A Bear Put Spread buys one put at a higher strike and sells one put at a lower strike with the same expiration. This creates a defined-risk, defined-reward position with lower cost than buying a put alone.
Educational use only. Options involve risk and this calculator does not provide investment advice or guarantee an outcome.