Iron Butterfly Calculator
Use this free iron butterfly calculator to model your neutral trade before you place it. Enter your body strike, wing strikes, and net credit to instantly see max profit, max loss, both breakeven prices, and a full P&L diagram.
How to use the iron butterfly calculator
Enter your body strike, wing strikes, and net credit above and the calculator updates in real time. Here is what each input does.
Enter the body strike
Enter the at-the-money strike shared by both the short call and short put. This single strike forms the peak of your profit tent and is typically placed at or very near the current stock price.
Enter the wing strikes
Enter the long put strike below the body and the long call strike above it. These define your max loss zone. Wider wings cost less but cap losses farther from the body. Equal-width wings are the standard setup.
Enter the net credit
Enter the total net credit received for the whole trade. This is the combined premium from selling the body call and put, minus the cost of both protective wing options. The credit is also your maximum possible profit.
Review your results
The P&L diagram updates instantly. See the sharp profit peak at the body strike, your two breakeven prices on either side, and the flat max-loss region beyond the wings.
Understanding the iron butterfly strategy
An iron butterfly is essentially a short straddle with wings attached for protection. You sell an at-the-money call and an at-the-money put, collecting a large combined premium because both options have maximum time value when they are closest to the money. You then buy an OTM call and an OTM put to cap your losses if the stock moves sharply in either direction. The result is a defined-risk strategy that collects more credit than an iron condor but demands a much more precise outcome to earn full profit.
Because both short options share the same strike, the profit zone is a single point rather than a range. In practice, the trade is profitable across a narrow band around the body strike defined by the two breakeven prices. The closer the stock closes to the body at expiration, the more premium decays in your favor. Time decay accelerates in the final weeks before expiration, which is when iron butterflies tend to be most actively managed.
Iron butterfly vs. iron condor
The choice between an iron butterfly and an iron condor depends on your view and your appetite for premium. The iron butterfly collects a significantly larger credit because the short options are at-the-money and carry maximum extrinsic value. However, the profit zone is narrow and the stock needs to essentially pin at one specific price for full profit. The iron condor collects less but gives the stock a wider range to move within. Many traders prefer the iron condor for its higher probability of keeping the full credit, while the iron butterfly appeals to those targeting larger credits on a high-conviction neutral view. If you’re weighing the two, run the same trade through our iron condor calculator to see how widening the short strikes changes max profit, max loss, and the breakevens.
Risk management
The primary risk is any significant directional move. Most iron butterfly traders set a max loss threshold before entering, often one to two times the initial credit, and close the position if the stock approaches either wing. Rolling the threatened side by buying back the short option and selling a new short option at a different strike is another common adjustment. The iron butterfly calculator helps you preview the new risk profile before executing any roll.
Iron butterfly example with real numbers
Here is a worked example you can enter directly into the calculator above to see the full P&L diagram in action.
Trade setup: XYZ stock trading at $100.00
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Iron butterfly calculator FAQ
Common questions about the iron butterfly strategy and how to use this calculator.
An iron butterfly is a four-leg options strategy built by selling an at-the-money call and an at-the-money put at the same strike price (the body), then buying an out-of-the-money call above and an out-of-the-money put below (the wings). You collect a net credit upfront. Maximum profit occurs if the stock closes exactly at the body strike at expiration, causing all four options to expire worthless. The long wings limit how much you can lose if the stock makes a large directional move.
The maximum profit is the net credit received when you opened the trade, multiplied by 100 shares per contract. This is achieved only if the stock closes at exactly the body strike price at expiration. For example, if you collected $4.50 in net credit on one contract, your max profit is $450. In practice, you rarely earn the full credit because the stock almost never pins at a precise strike at expiration. Many traders target closing the position for 50 percent of the max profit rather than holding to expiration for the remaining half.
The maximum loss is the wing width minus the net credit received, multiplied by 100. Wing width is the distance from the body strike to either long strike, assuming both wings are the same width. For example, with a $10-wide wing and $4.50 in net credit, max loss is $550 per contract ($10.00 – $4.50 = $5.50, times 100). This loss is realized if the stock closes at or beyond either long wing strike at expiration. The wings prevent any further loss beyond that level, which is the key difference from an unprotected short straddle.
An iron butterfly has two breakeven prices. The lower breakeven is the body strike minus the net credit received. The upper breakeven is the body strike plus the net credit received. For example, with a $100 body strike and $4.50 in net credit, the lower breakeven is $95.50 and the upper breakeven is $104.50. At expiration, the stock must close between those two prices for the trade to be profitable. Because the body strike is at-the-money and the credit is typically large, the breakeven range is wider than it looks relative to an iron condor of comparable width.
The difference comes down to the placement of the two short options. An iron condor uses separate short strikes for the put and call, creating a flat profit zone between them. An iron butterfly places both short options at the same at-the-money strike, creating a profit peak at one single price. The iron butterfly collects a larger net credit because both short options have maximum time value, but the profit region is a narrow tent rather than a wide plateau. The iron condor gives the stock more room to move and has a higher probability of keeping the full credit, while the iron butterfly offers a bigger payout if the stock pins at the body strike.
Iron butterflies work best when you have a high-conviction view that the stock will stay very close to its current price through expiration, and when implied volatility is elevated so the ATM options you are selling carry maximum premium. They are popular on indices like SPX and RUT during low-volatility regimes where the market is grinding sideways with small daily moves. The iron butterfly is less forgiving than an iron condor because any significant move reduces the profit sharply, so it is best used when the expected realized move is well inside the breakeven range. The iron butterfly calculator lets you confirm that before you put on the trade.
This calculator is for educational and informational purposes only. Options trading involves substantial risk and is not suitable for all investors. Past performance is not indicative of future results. Always consult a licensed financial professional before making investment decisions.