Butterfly Spread Calculator
Calculate the net cost, maximum profit, maximum loss, breakeven prices and profit at expiry of a long call or put butterfly spread from its three strikes and option premiums.
How it works
Net debit = lower premium − 2 × middle premium + upper premium · call payoff at expiry = max(S − K1, 0) − 2·max(S − K2, 0) + max(S − K3, 0) − debit · max profit (equal wings) = (K2 − K1) − debit, at S = K2 · max loss = debit · breakevens = K1 + debit and K3 − debit
A long butterfly buys one option at a low strike, sells two at the middle strike and buys one at a high strike, all with the same expiry. It costs a small net debit and pays most if the underlying finishes exactly at the middle strike, so it is a cheap, defined-risk bet that the price will stay put — a short-volatility trade. Calls and puts give the same profile when priced consistently (put-call parity). The calculator evaluates the payoff at every strike, so it also handles unequal (“broken-wing”) butterflies. Commissions and early assignment are not included.
Worked example
Buy a 95 call for 7.00, sell two 100 calls for 3.50 each and buy a 105 call for 1.20: the net debit is 7.00 − 7.00 + 1.20 = 1.20 a share, or 120.00 for one contract of 100 shares. At expiry the best outcome is a close at 100, worth (100 − 95) − 1.20 = 3.80 a share, a maximum profit of 380.00. The maximum loss is the 120.00 paid, the breakevens are 95 + 1.20 = 96.20 and 105 − 1.20 = 103.80, and reward-to-risk is 3.17 : 1.
Sources: Options Industry Council — Long Call Butterfly · Investopedia — Butterfly Spread
Frequently asked questions
When should I use a butterfly spread?
When you expect the underlying to finish close to a specific price at expiry and implied volatility is relatively high. The position gains as time passes if price stays near the middle strike.
What is the maximum loss on a long butterfly?
The net premium paid plus commissions. It happens if the price ends at or below the lower strike or at or above the upper strike.
Why is the maximum profit rarely reached?
Because it needs the price to close exactly at the middle strike at expiry. Most traders close the spread early once it has captured a good share of the potential profit.
What is a broken-wing butterfly?
A butterfly with unequal distances between strikes. It can be set up for a small credit, removing risk on one side while keeping it on the other; the calculator finds the profit, loss and breakevens for any strike spacing.
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Educational estimate, not investment, trading or tax advice. Brokers, exchanges and data providers use their own conventions, fees and figures — confirm with your broker, the exchange’s documentation or a licensed adviser before acting.