Butterfly Calculator
Use this butterfly option calculator to estimate the potential profit, loss, and breakeven prices of a butterfly
options strategy. Enter your trade details and instantly see how combining multiple call options or put options
at different strike prices performs across various stock prices at expiration. You can also customize the chart
range to visualize outcomes, making it easier to evaluate low-volatility, price-targeted strategies.
How to Use the Butterfly Option Calculator
How to Use the Butterfly Option Calculator
This butterfly calculator helps you analyze trades that profit when the stock price finishes near a specific target price at expiration. Butterfly strategies are commonly used to take advantage of low volatility with defined risk.
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 three option legs
Choose three options of the same type (all calls or all puts) with the same expiration date. The butterfly consists of one lower strike, one middle strike, and one higher strike.
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Enter the strike prices
Input the lower strike, the middle strike, and the higher strike. The middle strike is typically where you expect the stock to be near expiration.
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Enter the premiums for each leg
These are the prices paid or received for each option contract in the butterfly position.
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Confirm the position structure
A standard long butterfly typically involves buying one option at the lower strike, selling two options at the middle strike, and buying one option at the higher strike.
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Enter the expiration date
All 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 shape.
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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 butterfly position.
Understanding the Butterfly Options Strategy
What Is a Butterfly Option Strategy?
A butterfly is an options strategy that uses three strike prices with the same expiration date to create a defined-risk, range-bound trade. Butterflies can be built using either all calls or all puts and are designed to profit when the stock price finishes near the middle strike at expiration.
Butterfly strategies are commonly used when a trader expects low volatility and a relatively stable price near a specific level.
How Does a Butterfly Work?
A typical long butterfly is constructed by buying one option at a lower strike price, selling two options at a middle strike price, and buying one option at a higher strike price. This creates a tent-shaped payoff diagram with limited risk and limited reward.
Key characteristics of a butterfly:
- Direction neutral with a narrow price target
- Maximum loss limited to the net premium paid
- Maximum profit capped and occurs near the middle strike
- Defined risk and reward
Maximum Profit and Loss
Maximum profit occurs when the stock expires at or very near the middle strike price. Maximum loss occurs when the stock expires outside the upper or lower breakeven points, with losses limited to the total premium paid.
When Do Traders Use Butterflies?
- Expecting low volatility or price consolidation
- Targeting a specific expiration price
- Seeking defined-risk strategies with high reward-to-risk ratios
- Trading around events after implied volatility has declined