Iron Butterfly Calculator
Use this iron butterfly calculator to estimate the potential profit, loss, and breakeven prices of an iron
butterfly options strategy. Enter your trade details and instantly see how combining a short straddle with
protective wings performs across different stock prices at expiration. You can also customize the chart range
to visualize outcomes across a wide range of price movements, helping you evaluate defined-risk, premium-selling
strategies more effectively.
How to Use the Iron Butterfly Calculator
How to Use the Iron Butterfly Calculator
This iron butterfly calculator helps you analyze trades that profit when the stock price stays near the short strike price at expiration. It uses four option legs with the same expiration date: a call spread and a put spread that share the same short strike in the middle.
Follow these steps to use the calculator:
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Enter the stock’s current price
This is the current market price of the underlying stock.
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Select four option legs
Choose two calls and two puts with the same expiration date. The iron butterfly typically sells a call and a put at the same middle strike price, then buys a higher-strike call and a lower-strike put to define risk.
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Enter the strike prices
Input the middle strike price (shared by the short call and short put), plus the lower put strike and the higher call strike that create the protective wings.
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Enter the premiums for each leg
These are the prices received or paid for each option contract in the iron butterfly.
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Confirm the position structure
An iron butterfly is typically a net credit strategy: sell the call and put at the middle strike, and buy the wings to cap risk on both sides.
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Enter the expiration date
All four option legs must share the same expiration date so the payoff is calculated correctly.
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Set the chart range
Define the range of stock prices you want to analyze at expiration to visualize breakevens and payoff zones.
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View your results
The calculator will display maximum profit, maximum loss, breakeven prices, and a profit and loss chart for the full iron butterfly position.
Understanding the Iron Butterfly Options Strategy
What Is an Iron Butterfly?
An iron butterfly is a neutral options strategy that combines a short put and a short call at the same strike price (the “body”) with a long put below and a long call above (the “wings”), all sharing the same expiration date. The goal is for the stock to finish close to the middle strike at expiration.
Iron butterflies are commonly used when a trader expects limited price movement and wants defined risk while collecting premium.
How Does an Iron Butterfly Work?
The strategy is typically opened for a net credit. The premium collected from selling the call and put at the middle strike is partially offset by the cost of buying the wings. The wings cap the risk if the stock moves sharply in either direction.
Key characteristics of an iron butterfly:
- Direction neutral with a range-bound outlook
- Maximum profit limited to the net premium received
- Maximum loss capped and known in advance
- Profits most when price expires near the middle strike
Maximum Profit and Loss
Maximum profit occurs when the stock expires at the middle strike, causing both short options to expire with minimal intrinsic value. Maximum loss occurs if the stock expires beyond either wing strike, with losses capped by the wing width minus the net premium received.
When Do Traders Use Iron Butterflies?
- Expecting low volatility or a “pin” near a specific price level
- Seeking a defined-risk premium-selling strategy
- Trading around events where implied volatility may be elevated
- Targeting a narrower profit range than an iron condor in exchange for higher credit