Iron Butterfly
An iron butterfly is a defined-risk, credit options strategy built around a target price. It combines a short straddle at one strike with protective long wings on either side.
Defined Risk. Collected Up Front.
Iron butterfly — a credit received at entry, with capped risk on both sides.
Illustrative example — not live market data.
Manual Market — Go Beyond a Single Expiration
Manual Market lets you set expiration dates independently for each leg and model positions with your own inputs — without depending on OptionLab's built-in US or Israel market data. Explore more advanced positions shaped by both price and time.
Related Strategies
How It Works
An iron butterfly uses four legs, all at the same expiration: buy a lower-strike put, sell a middle-strike put, sell a middle-strike call, and buy an upper-strike call. The short put and short call share the exact same middle strike — that shared strike is what distinguishes an iron butterfly from an iron condor, which uses two separate short strikes instead.
Because the two short legs are sold at the same time the two wings are bought, the position opens for a net credit — and both the maximum profit (that credit) and the maximum loss are defined from the start. Profit is highest when the price finishes right at the middle strike, and shrinks as the underlying moves away from it in either direction.
Build an Iron Butterfly in OptionLab
Select the Iron Butterfly strategy in OptionLab, then adjust the strikes and contracts you want to analyze. OptionLab shows you the payoff graph, breakeven points, and maximum profit and maximum loss as soon as your legs are in place.
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