# Iron Butterfly Calculator - Max Profit, Loss & Breakevens Source: https://theoptionsbench.com/iron-butterfly-calculator/ > Plain-text mirror for AI/LLM ingestion. Canonical HTML page: https://theoptionsbench.com/iron-butterfly-calculator/ --- Iron butterfly - key facts An iron butterfly sells a put and a call at the same body strike and buys protective wings - a high-credit, defined-risk bet that the stock pins the body. Max profit Net credit × 100 - kept only if price pins the body strike at expiration. Max loss (Wing width - net credit) × 100 - only one wing can be breached. Lower breakeven Body strike - net credit (per share). Upper breakeven Body strike + net credit (per share). Return on risk Net credit ÷ (wing width - net credit). Want the full explanation? Read What is an Iron Butterfly? . How to set it up Outlook: Dead-still and overpriced: you expect the stock to pin one specific strike by expiration while elevated implied volatility deflates. Ideal DTE 30-45 days. That window puts you on the steep part of the theta curve while still leaving room to react if the body gets tested. Go shorter (a weekly or 0DTE) only if you'll babysit it - gamma whips a narrow-zone trade hard near expiry. Strike selection Sell the body at-the-money - the ~0.50-delta short straddle is the engine - then set both wings out to the expected move so a one-sigma drift doesn't blow through them. Keep the wings the same width so max loss is identical on either side. Wider wings collect more credit and risk more; narrower wings cap the risk but turn a small move into a full loss. Enter when IV Rank above 50, ideally above 70. The credit is the entire payoff, so a thin one buys you a tiny profit zone for the same capped risk. First ask why IV is high - if an earnings report or a ruling lands inside your expiration, the fat credit is paying for the exact move that breaks you. Take profit Close around 25% of the credit - stretch to 40-50% only if the stock is sitting right on the body. This is an at-the-money credit trade with a narrow zone, so there's a lot to give back: max profit needs a perfect pin at expiration. (Contrast a wide condor, where 50% is fine - the zone there is forgiving.) Manage / exit Roll or close by ~21 DTE, or sooner if price tests a breakeven. Past 21 DTE, gamma risk outruns the remaining theta on a tight tent. Don't 'defend' a tested butterfly by widening into the move - take the defined loss and reset. Position size Size it small - this is a high-reward, lower-probability bet on one price, not a core income trade. One position should never be able to hurt the account when the stock walks off the body. Use it when: You have a real conviction the stock settles at a specific level - a pin from heavy open interest, a magnet strike, a post-event drift to fair value - and IV is rich enough to pay a large credit for that precision. Skip it when: You only expect a vague range rather than a pin - widen the short strikes into an Iron Condor for a forgiving zone - or you expect an actual move, which turns the tight profit band into a fast full loss. Starting points, not rules - the conventions experienced sellers reach for first. Your account, thesis and risk move every number here. See every strategy's setup -> ## How to use this calculator - Enter the current share price and days to expiration. - Set the body strike - the shared strike of the short call and short put. - Set the lower wing (long put) and upper wing (long call), then the net credit you collect. - Set the number of contracts - each multiplies the credit and risk by × 100. - Read the result: max profit, max loss, both breakevens, profit zone, and return on risk. **What it tells you:** whether an iron butterfly's credit is worth the narrow profit zone and capped risk - and exactly where the stock has to stay to keep it. ## How this calculator works An iron butterfly is four legs in one expiration: a **short call** and a **short put** at the same body strike (an at-the-money short straddle), wrapped in a **long put** below and a **long call** above as protective wings. Because you sell the straddle, the net credit is large - but you only keep all of it if the stock pins the body strike at expiration. Enter the body, the two wings and the net credit and the calculator returns the full picture. **Max profit** is the credit times 100 per contract; **max loss** is the wider wing's width minus the credit, times 100, because at expiration the stock can only finish in one tail - only one wing can be breached. The **two breakevens** are the body strike plus and minus the credit, so the profit zone is exactly twice the credit wide. The payoff diagram shows the tent shape: a single peak at the body, sloping down to flat, capped losses on each wing. ## Iron butterfly vs iron condor They are the same idea with one knob turned. The iron condor sells two separate inner strikes, leaving a wide profit plateau between them; the butterfly collapses those two strikes onto a single body, trading the plateau for a much larger credit and a single profit peak. The butterfly pays more when the stock finishes near your strike, and loses faster when it drifts. Choose the butterfly when you have a strong view that the stock pins a level; choose the condor when you just expect it to stay in a range. ## Worked example A fixed, hypothetical illustration - not live market data. A hypothetical stock trades at $100. With 30 days to expiration you sell the $100 straddle and buy the $90 put and $110 call as wings, for a $5.00 net credit. Both wings are $10 wide. - Net credit / max profit: $5.00 × 100 = $500 per contract (only if the stock pins $100). - Max loss: ($10 - $5.00) × 100 = $500 per contract. - Lower breakeven: $100 - $5.00 = $95. Upper breakeven: $100 + $5.00 = $105. - Profit zone: $95 to $105 - $10 wide, or 10% of the price. - Return on risk: $500 ÷ $500 = 100% over 30 days. Found this useful? Get the bi-weekly email Strategy breakdowns, the edge cases these calculators surface, and trades worth watching - free, no noise. Join the free email -> ## ⚠ Common mistakes - Expecting to keep the full credit. Max profit needs the stock to pin the body exactly - realistically you close early for a fraction of it. - Selling a butterfly when IV is low. The credit is the whole payoff; thin premium means a tiny profit zone for the same risk. Check the IV Rank first. - Picking too narrow a body for a moving stock. The narrow profit zone is breached easily; match it to the expected move. - Forgetting the four-leg commissions. Opening is four contracts and closing can be four more - material against a fixed credit. - Assuming both wings can lose. They cannot at expiration - max loss is the wider wing minus the credit, not both. ## Frequently asked questions What is an iron butterfly? An iron butterfly is a four-leg, market-neutral options trade: you sell an at-the-money call and put at the same body strike, and buy a further out-of-the-money put and call as protective wings. It collects a large net credit and profits most when the stock pins the body strike at expiration. It is the higher-credit, narrower cousin of the iron condor - a condor whose two short strikes have been collapsed onto one strike. How are max profit and max loss calculated? Max profit is the net credit × 100 per contract, kept only if the stock finishes exactly at the body strike. Max loss = (wider wing width - net credit) × 100: at expiration the stock can only be in one tail, so only one wing can be breached, and the loss is set by the wider wing minus the credit you collected. What are the two breakevens? Lower breakeven = body strike - net credit per share; upper breakeven = body strike + net credit per share. The position is profitable anywhere between those two prices and loses outside them, up to the capped max loss. The whole profit zone is just twice the net credit wide - much narrower than an iron condor. Iron butterfly vs iron condor - what is the difference? Both are defined-risk, market-neutral credit trades. The condor sells two different inner strikes, giving a wide profit plateau; the butterfly sells one shared body strike, giving a much larger credit but a single profit peak and a narrow zone. The butterfly pays more if the stock pins your strike, the condor is more forgiving if it drifts. When does an iron butterfly make its maximum profit? Only when the stock closes exactly at the body strike at expiration, so the short call and short put both expire worthless and the long wings expire unused - you keep the entire credit. Any move away from the body gives back profit, which is why the butterfly is a high-conviction, pin-the-strike trade. Should the two wings be the same width? They usually are (a balanced butterfly), which keeps the max loss the same on either side. You can run unequal wings, but then the max loss is set by the wider wing, since that side risks more. This calculator always uses the wider wing so the max loss it shows is the true worst case. Iron butterfly vs short straddle? A short straddle sells the same at-the-money call and put but with no wings - bigger credit, but undefined risk and heavy margin. The iron butterfly adds the long wings, capping the loss and slashing the capital required. You give up some credit for a loss you can actually survive - usually the right trade for a retail account. When should I use an iron butterfly? When you expect a stock to pin near a specific price and want a bigger credit than an iron condor gives, in exchange for a narrower profit zone. It suits a high-IV, low-movement view with a precise target, ideally into an event you expect to fizzle. Skip it for a rough range (an iron condor is safer) or when you expect a move - a tight zone turns a move into a full loss fast.