Iron butterfly strategy calculator

Shared center strike, protected outer wings

The short iron butterfly combines a short straddle with a long strangle: sell the center put and call, then buy a lower put and higher call. All four contracts use the same underlying, expiration and quantity. This calculator requires equally spaced wings. The center need not equal the current stock price. The OIC short iron butterfly guide describes this structure.

With center K, wing width W, credit C and expiration price S, the short position earns [C − min(|S − K|, W)] × 100 × contracts. Maximum profit is C × 100 × contracts at K. Maximum loss is (W − C) × 100 × contracts at or beyond either wing. Breakevens are K − C and K + C. A positive result occurs between those breakevens, not everywhere between the wings.

The Long setting reverses every leg and pays a debit D. Its expiration P/L is [min(|S − K|, W) − D] × 100 × contracts. Maximum loss is the debit; maximum profit is wing width minus debit, scaled by 100 and quantity. Breakevens are K − D and K + D. These formulas assume 0 < premium < W and ignore costs. Unequal wings and adjusted contracts need a different model.

Reproduce a 90 / 100 / 110 iron butterfly

Use the default inputs: Short, center $100, wing width $10, credit $5 per share and one contract per leg. Hypothetical entry premiums are $3 for selling the 100 put, $4 for selling the 100 call, $1 for buying the 90 put and $1 for buying the 110 call. The net credit is 3 + 4 − 1 − 1 = $5 per share, or $500. These are arithmetic assumptions, not market quotes.

At $109 the price is still inside the wings, but the result is (5 − 9) × 100 = −$400. At $100.01 the theoretical result is $499, while the center call is in the money and the 110 call is out of the money. Change the scenario price above to inspect those individual legs. With an assumed $0.65 opening fee per option contract, four opening fees total $2.60, reducing the $500 maximum to $497.40 before any closing costs. Fees are not included in the calculator output.

Iron butterfly, regular butterfly, or iron condor?

A long call butterfly uses a 1:−2:1 ratio in one option type. Its similar tent shape does not make it an iron butterfly. Use the butterfly spread calculator for that structure or the iron condor calculator for separate short strikes. Credit and probability comparisons require actual strikes, premiums and a stated probability model; the strategy names alone cannot rank them.

Why a finish near the center needs an exit plan

American-style short options can be assigned before expiration. Assignment of the center put can create long stock; assignment of the center call can create short stock. Owning a wing does not automatically close that stock exposure. Exercise decisions and broker deadlines matter, especially near the center at expiration. The OIC assignment FAQ explains why short positions remain subject to assignment.

At the example's $100.01 finish, assignment of the short 100 call could require delivery of 100 shares while the long 110 call expires out of the money. A residual short-stock position then has a different risk profile from the four-leg diagram. The $500 theoretical loss cap assumes the intact spread settles as modeled. It does not cap losses from a later uncovered stock position, leg-by-leg exits, financing or execution costs.

Fidelity's strategy guide discusses early assignment and expiration position risk. Before holding through expiry, confirm exercise style, cash versus physical settlement, settlement time, broker cutoffs and buying power. Early call assignment is particularly relevant around ex-dividend dates. Cash-settled European-style contracts have different exercise mechanics; check the contract specification.

Wider wings increase W − C if credit is held constant. Actual wing prices also change the credit, so wider wings do not automatically provide more protection. Before expiry, option time value, implied volatility and bid/ask spreads affect the cost to close. This expiration chart supplies no probability of profit, live mark or pre-expiry exit estimate.

Build the same four legs in TradingView Options

1. Open the underlying in TradingView Options and choose one expiration. Use the strategy builder's buy and sell controls to add the lower put, shared-center put and call, and upper call. Confirm quantities and direction rather than relying on the strategy label.
2. Match the contract symbols, multiplier, strike spacing and settlement terms. Record each leg's quote timestamp and bid/ask. A conservative opening credit estimate uses short-leg bids minus long-leg asks; midpoint prices do not establish a fill.
3. Copy the net premium per share into this calculator and reproduce the center, both breakevens and prices beyond both wings. TradingView's strategy builder documentation explains its positions and chart controls.
4. Use Pineify's AI Stocks & Options Picker to inspect available option-chain contracts by expiration. Check missing contracts and quote freshness before copying inputs. Record the four legs, quote assumptions, fee estimate and intended expiry exit in Trading Journal notes; add actual fills and any assignments during review.

The calculator does not import a TradingView position or place orders. A modeled scenario is neither a historical backtest nor a tradable multi-leg quote. Pineify's option-chain view and journal are separate research and recordkeeping steps.

Educational information, not investment advice. Options can create losses and delivery obligations; check the broker and contract rules for your position.

Iron butterfly questions