Iron Butterfly Calculator
An iron butterfly sells a straddle at the money and buys wings for protection. Maximum profit lands on a single price — the centre strike — and decays either side of it. Enter the four legs to see the peak and the breakevens.
The arithmetic
The default sells both the $100 put and $100 call and buys the $90 put and $110 call, for a $4.80 net credit ($480).
- Max profit = the credit, $480 — but only if the underlying finishes exactly at $100.
- Max loss = (10 − 4.80) × 100 = $520, beyond $90 or $110.
- Breakevens = $95.20 and $104.80.
A condor with the middle removed
Set an iron condor's two short strikes to the same price and you have an iron butterfly. That single change alters the character of the trade completely. The condor pays its maximum across a band; the butterfly pays its maximum at one point and starts giving money back immediately on either side. In exchange, the butterfly collects a much larger credit — $480 against $220 here — because at-the-money options carry the most extrinsic value.
The practical read: a butterfly is a bet on a specific price, a condor is a bet on a range. If your view is "this thing is going nowhere", the condor matches it. If your view is "this pins at $100 on expiration Friday", the butterfly pays far more for being right.
The peak is narrower than it looks
The chart's apex is a single point. Landing on it is luck, not skill, and no sensible trader plans for it. The realistic outcome is somewhere on the slope, and the useful question is how much of the credit survives a normal-sized move. In the default, a $3 move away from the centre gives back $300 of the $480. Read the slope, not the peak.
Where butterflies genuinely earn their place
Around pinning behaviour near large open interest strikes, and immediately after a volatility event — when at-the-money extrinsic value is still elevated but the event that justified it has passed. Both are specific, situational reasons. A butterfly sold as a default income structure just concentrates the same risk a condor takes, into a smaller target.
Where the 100x multiplier comes from
Product specification, not convention: OCC defines a standard equity option as covering 100 shares, premium quoted in points where one point is $100[1] — so a $1.85 premium costs $185, and every payoff here applies that multiplier to the leg structure.
One exception is worth knowing about: adjusted contracts, covered on the options profit calculator.
Calculating it is the easy half
Four legs and one centre strike. The payoff is arithmetic — anyone can run it. What it cannot show is whether you believed the trade when you put it on, or are describing a winner picked out of a month of noise.
That is the gap kappi closes: the position committed before the fact, sealed and timestamped on a log nobody can edit afterwards. A screenshot of this chart proves you can use a calculator; a sealed commit proves you took the trade. $15/month, no free tier.
Sources
Frequently asked questions
What is the maximum profit on an iron butterfly?
The net credit received, and only if the underlying settles exactly at the centre strike. Any move away from it gives some of the credit back.
What are the breakevens on an iron butterfly?
Centre strike plus and minus the net credit per share. A $100 butterfly taken in for $4.80 breaks even at $95.20 and $104.80.
Iron butterfly or iron condor?
The butterfly collects a much larger credit but pays maximum only at one price. The condor pays maximum across a band for less credit. Butterfly for a price target, condor for a range view.
Why is the credit so much bigger than a condor's?
Both short legs are at the money, where extrinsic value peaks. You are selling the most expensive options on the chain and buying cheap wings against them.