How to use this calculator
- Enter the current share price and days to expiration.
- Enter the three strikes - the lower (long), the body (short ×2), and the upper (long), kept equally spaced.
- Enter the net debit you pay to open the spread.
- Set the number of contracts.
- Read the result: max profit at the body, max loss, both breakevens, and the profit-zone width.
What it tells you: how much a butterfly can make if the stock pins the body strike, and the narrow price band where it stays profitable.
How this calculator works
A long butterfly spread is three strikes in one expiration, built from a single option type: a long option at the lower strike, two short options at the body strike, and a long option at the upper strike — the classic 1-2-1 ratio. Because you buy more than you sell, you pay a small net debit, and that debit is the most you can lose. You make money only if the stock drifts toward the body strike by expiration.
Enter the three strikes and the net debit and the calculator returns the full picture. Max profit is the wing width minus the debit, times 100 per contract, kept only if the stock pins the body strike. Max loss is the whole debit, paid if the stock finishes at or beyond either outer strike. The two breakevens are the lower strike plus the debit and the upper strike minus the debit. The payoff diagram shows the tent shape: a single peak at the body, sloping down to a flat, capped loss on each side.
Butterfly spread vs iron butterfly
They are the same payoff seen from two sides. The long butterfly here is a debit trade in one option type — you pay to open it and profit if the stock pins the body. The iron butterfly is a credit trade using a call spread and a put spread together — you are paid to open it and keep the credit if the stock pins the body. The tent shape, the single profit peak and the capped loss are the same; for matching strikes the risk and reward are effectively identical, so most traders simply open whichever one fills at a better price.
Worked example
A fixed, hypothetical illustration — not live market data.
A hypothetical stock trades at $100. With 30 days to expiration you buy the $95 call, sell two $100 calls and buy the $105 call for a $2.00 net debit. Both wings are $5 wide.
- Max profit: ($5 − $2.00) × 100 = $300 per contract (only if the stock pins $100).
- Max loss: $2.00 × 100 = $200 per contract — the whole debit.
- Lower breakeven: $95 + $2.00 = $97. Upper breakeven: $105 − $2.00 = $103.
- Profit zone: $97 to $103 — $6 wide, or 6% of the price.
- Return on risk: $300 ÷ $200 = 150% over 30 days.
Common mistakes
- Expecting to keep the full max profit. The peak needs the stock to pin the body exactly at expiration — realistically you close early for a fraction of it.
- Picking too narrow a body for a moving stock. The narrow profit zone is breached easily; match the body to the expected move.
- Buying a butterfly when IV is high. A debit butterfly is long premium — rich premium makes it expensive and shrinks the edge. Check the IV Rank first.
- Forgetting the four-contract commissions. A 1-2-1 butterfly opens four contracts and can close four more — material against a small debit.
- Running unequal wings by accident. Equal wings keep the loss symmetric; unequal wings are a different, broken-wing structure with a different risk profile.
Frequently asked questions
What is a butterfly spread?
A long butterfly spread is a three-strike, defined-risk debit trade built from one option type: buy one lower-strike option, sell two body-strike options, and buy one upper-strike option, all in the same expiration with equally spaced strikes. You pay a small net debit and profit most when the stock pins the body strike at expiration. It is the long-premium mirror of the iron butterfly.
When should I use a long butterfly?
When you have a precise view that the stock will sit near a specific price by expiration and barely move - the butterfly pays the most if the stock pins the body strike, and it is cheap precisely because that is unlikely. It is a low-cost, defined-risk bet on a target: a pin into an event, or a drift into a level, ideally when implied volatility is high enough to make the two short body options worth selling. Skip it if you expect a real move either way - the profit zone is narrow, and a stock that runs past either wing hands you the whole debit as a loss. Think sniper trade, not all-weather.
How are max profit and max loss calculated?
Max profit = (wing width − net debit) × 100 per contract, realised only if the stock finishes exactly at the body strike. Max loss = the net debit × 100 — the entire amount you paid — which you give up if the stock finishes at or beyond either outer strike. Because you can only ever lose the debit, the butterfly is fully defined-risk.
What are the two breakevens?
Lower breakeven = lower strike + net debit per share; upper breakeven = upper strike − net debit per share. The trade is profitable anywhere between those two prices, peaking at the body strike, and loses the debit outside them. The profit zone is twice the wing minus twice the debit wide — narrow, which is the cost of the cheap entry.
Butterfly spread vs iron butterfly — what is the difference?
They have the same tent-shaped payoff and the same max profit at the body, but opposite construction. The butterfly is a long-premium DEBIT trade using one option type (all calls or all puts); the iron butterfly is a short-premium CREDIT trade using both a call spread and a put spread. The butterfly costs you a small debit up front; the iron butterfly pays you a credit. For equal strikes the risk and reward are effectively identical — pick whichever fills better.
Call butterfly or put butterfly — which should I use?
For equally spaced strikes a long call butterfly and a long put butterfly have an identical profit-and-loss profile, by put-call parity. In practice traders pick the side whose strikes are out-of-the-money for tighter bid-ask spreads and cleaner fills: a call butterfly when the body is at or above the price, a put butterfly when the body is at or below it. This calculator models either — just enter the three strikes and the net debit.
Do the two wings have to be equal?
This calculator models the standard balanced butterfly, where the lower and upper wings are the same width — so the max loss is the debit on either side. You can trade unequal wings (a broken-wing butterfly), but that changes the risk profile and is often opened for a credit, so it is a different structure. Keep the wings equal here for the numbers to hold.
Related tools and guides
Prefer to be paid the credit instead of paying the debit? Compare with the Iron Butterfly Calculator, or build any custom structure with the Payoff Diagram Builder.
Want a wider profit zone? See the Iron Condor Calculator. Size the body to the move with the Expected Move Calculator, check premium with the IV Rank Calculator, and look up any term in the options glossary.
Educational tool only. Nothing here is financial advice. A butterfly spread is defined-risk but its narrow profit zone is breached easily, and the four-leg commissions and bid-ask spreads can be material against a small debit. Size positions accordingly.