Butterfly Spread Calculator
Cost, both break-evens, max profit, and max loss for a three-strike butterfly.
Cheap, defined-risk bet that the stock pins near the middle strike at expiration.
Figures are per position at expiration and include the 1 contract entered, at 100 shares each. They exclude commissions, assignment fees, and any early-assignment or dividend risk on short legs. Values before expiration differ, because time value and implied volatility still carry weight.
A butterfly buys one option at a lower strike, sells two at a middle strike, and buys one at a higher strike, all in the same expiration. The doubled middle leg is what creates the tent-shaped payoff: profit peaks exactly at the middle strike and falls away on both sides.
Worked example. Buy the 95 call for $7.00, sell two 100 calls for $3.50 each, buy the 105 call for $1.50. The net debit is $150, which is the entire risk. Maximum profit is $350 if the stock finishes exactly at $100, and the break-evens are $96.50 and $103.50. Risking $150 to make $350 is an attractive ratio, and it is compensation for how narrow that profitable window is.
Frequently asked questions
When does a butterfly make sense?
When you expect a stock to sit still and you want to pay very little to express that. It is a cheaper, lower-probability alternative to an iron condor: a better payoff ratio in exchange for needing the price to land in a much tighter range.
Why does the middle strike have two contracts?
It is what turns two spreads into one tent. A butterfly is really a bull spread and a bear spread sharing a middle strike, so that strike carries both, which is why the ratio is 2 to 1. Enter it as one contract of the position and the calculator applies the doubling.
Do I ever get the maximum profit?
Almost never in full. It requires the stock to close exactly at the middle strike on expiration day. In practice butterflies are closed early for a fraction of the theoretical maximum, and planning around the peak is a good way to be disappointed.
What are the practical drawbacks?
Four legs mean four bid-ask spreads and four commissions on the way in and, if you hold to expiration, potential pin risk at the middle strike. The strategy works best on liquid underlyings with tight markets, where the friction does not consume the edge.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.