Iron Condor vs Iron Butterfly
Updated 6 June 2026 · by Theo Chen
They are the same idea with one knob turned. Both are four-leg, defined-risk, market-neutral credit trades that profit when a stock goes nowhere. The difference is whether you spread your two short strikes apart (the condor) or stack them on one body strike (the butterfly) - and that single choice trades a wide, forgiving profit zone against a much larger credit. Here is how to decide which to sell.
The short verdict
Sell the iron condor when you just expect the stock to stay in a range - it gives a wide profit zone and a higher probability of profit for a smaller credit. Sell the iron butterfly when you have a real conviction the stock will pin a specific level - it pays a much larger credit, but the profit zone is narrow and you need precision. Condor = forgiving and likely; butterfly = precise and lucrative.
Side by side
| Iron Condor | Iron Butterfly | |
|---|---|---|
| Short strikes | Two, spread apart (OTM put + OTM call) | One shared body strike (ATM) |
| Credit received | Smaller | Much larger |
| Profit zone | Wide plateau between the shorts | Narrow peak at the body |
| Max profit when | Price stays between the short strikes | Price pins the body exactly |
| Probability of profit | Higher | Lower |
| Max loss | Wider spread - credit (defined) | Wider wing - credit (defined) |
| Best when | You expect range-bound drift | You expect a pin at one level |
| Bottom line | Pick if you want a wider zone and higher win rate | Pick if you expect a pin and want the larger credit |
The iron condor: wide and forgiving
An iron condor is a bull put spread below the price and a bear call spread above it, sold together for one net credit. Because the two short strikes are spread apart, the stock can wander anywhere between them and you still keep the full credit. That wide plateau is what makes the condor the higher-probability trade - you are betting on a range, not a point. The price is a smaller credit and therefore a smaller maximum profit relative to the capital at risk.
Strengths
- Wide profit zone, higher probability of profit
- Forgiving if the stock drifts
- Defined, knowable max loss
Trade-offs
- Smaller credit and max profit
- Four legs to open and manage
- A trending move can still breach a side
The iron butterfly: precise and lucrative
An iron butterfly sells the at-the-money call and put at one body strike - an at-the-money short straddle - wrapped in protective wings. Selling the straddle collects a large credit, but you only keep all of it if the stock finishes right at the body. Move away from that strike and the profit gives back quickly. The butterfly is a higher-conviction trade: you are paid more for being right about where the stock lands, not just that it stays calm.
Strengths
- Much larger credit and max profit
- Best risk-reward if the stock pins the body
- Defined, knowable max loss
Trade-offs
- Narrow profit zone, lower probability
- Needs the stock to settle near one level
- Profit decays fast as price moves off the body
Who should sell which
- Sell an iron condor if: you expect the stock to stay range-bound, you want a higher win rate, and you are happy with a smaller credit for the safety of a wide zone.
- Sell an iron butterfly if: you have a strong view the stock will settle near a specific strike, and you want the largest credit available for a defined-risk trade.
- Either way: size the wings to the expected move and only sell premium when the IV rank is high enough to be worth it.
Frequently asked questions
What is the main difference between an iron condor and an iron butterfly?
Both are four-leg, defined-risk, market-neutral credit trades. The iron condor sells two different inner strikes - a put below the price and a call above it - leaving a wide profit plateau between them. The iron butterfly collapses those two short strikes onto a single body strike, giving a much larger credit but a single profit peak and a narrow zone. The condor is more forgiving of drift; the butterfly pays more if the stock pins your strike.
Which one collects more premium?
The iron butterfly. Because it sells at-the-money options (the short straddle at the body), its credit is much larger than the condor, whose short strikes sit out-of-the-money. But that bigger credit comes with a narrower profit zone, so you keep the full amount only if the stock finishes very close to the body.
Which has a higher probability of profit?
Usually the iron condor. Its profit zone is wide - anywhere between the two short strikes - so the stock has more room to wander and still leave you a winner. The iron butterfly needs the stock to settle near one specific strike, which is less likely, so it trades a higher payout for a lower hit rate.
Is the max loss the same?
They are calculated the same way: the wider wing width minus the net credit, times 100 per contract. At expiration the stock can only finish in one tail, so only one side can ever be breached. Both are fully defined-risk - you know your worst case before you open.
When should I trade a butterfly instead of a condor?
Trade the iron butterfly when you have a genuine conviction that the stock will settle near a specific level by expiration - a magnet strike, a pin from heavy open interest, or a post-event drift to fair value. Trade the iron condor when you simply expect the stock to stay in a range without a strong view on exactly where it lands.
Run the numbers
Compare the credit, breakevens and max loss side by side with the Iron Condor Calculator and the Iron Butterfly Calculator. New to the single-underlying version? See What is a Butterfly Spread?. Prefer the long-premium version? See Strangle vs Straddle, or browse all the options calculators.
Educational information only - not financial advice. Both strategies are defined-risk but their narrow profit zones are breached easily, and four-leg commissions, early assignment and pin risk near the short strikes can change the real-world outcome. Size positions accordingly.