What is a Butterfly Spread Options Strategy?
A butterfly spread is a neutral options strategy that combines a bull spread and a bear spread using three strike prices. It involves buying one lower strike option, selling two at-the-money options at the center strike, and buying one higher strike option — all with the same expiration date. The strategy profits when the underlying stock price stays near the center strike at expiration, creating a characteristic tent-shaped payoff diagram with a narrow profit zone.
A long call butterfly is entered for a net debit. The maximum profit occurs when the stock price equals the center strike at expiration. The maximum loss is limited to the net debit paid, which occurs when the stock moves beyond either wing strike. This makes it an attractive strategy for traders who expect low volatility and want defined risk.
How to Use This Butterfly Spread Calculator
- 1
Enter a Stock Ticker
Type the ticker symbol (e.g., AAPL, MSFT, SPY) and click "Load Options Chain" to fetch real-time options data from the market.
- 2
Choose Option Type & Expiration
Select Call or Put butterfly and pick an expiration date. The calculator shows days to expiration (DTE) for each available date.
- 3
Select Center Strike
Choose the center strike price — typically at or near the current stock price (ATM). This is where you sell 2 contracts and where maximum profit occurs.
- 4
Set Wing Width
Select the wing width — the distance from the center strike to each wing. Wider wings increase max profit but also increase the net debit (cost).
- 5
Analyze Results
Review net debit, max profit, max loss, breakeven points, and the interactive payoff diagram. Adjust strikes and contracts to optimize your trade.
Key Metrics Explained
Net Debit
The cost to enter the butterfly spread. Calculated as (Lower Premium + Upper Premium) - (2 × Center Premium) per share, times 100 shares per contract. This is also your maximum possible loss.
Maximum Profit
(Wing Width - Net Debit) × 100 × Contracts. Achieved when the stock price equals the center strike at expiration. The profit zone is narrow and centered.
Maximum Loss
Equal to the net debit paid. Occurs when the stock price moves beyond either wing strike at expiration — below the lower strike or above the upper strike.
Breakeven Points
Lower BE = Lower Strike + Net Debit. Upper BE = Upper Strike - Net Debit. The stock must stay between these prices for the trade to be profitable at expiration.
Wing Width
The distance between the center strike and each wing strike. Equal spacing is required for a standard butterfly. Wider wings increase both potential profit and cost.
Reward/Risk Ratio
Max Profit divided by Max Loss. Butterfly spreads often offer attractive reward-to-risk ratios because the cost (max loss) is typically small relative to the potential profit.
Why Use Our Butterfly Spread Calculator?
Real-Time Data
Fetches live options chain data so you always see current premiums, implied volatility, and Greeks for accurate butterfly spread calculations.
Smart Strike Selection
Auto-selects the nearest ATM center strike and computes all valid wing widths. Adjust with dropdowns to explore different configurations.
Payoff Visualization
Interactive chart showing your P/L at every price point at expiration, with breakeven and current price reference lines for the characteristic butterfly shape.