Long butterfly
A cheap, narrow bet that the underlying finishes at a particular price.
The view: It pins, right here.
Construction
| Leg | Qty | Strike at 100 spot |
|---|---|---|
| Long call | 1 | 95 |
| Short call | 2 | 100 |
| Long call | 1 | 105 |
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- Max profit
- +366
- Max loss
- -134
- Breakeven
- 96.34 / 103.66
- Net cash
- -134
When it fits
A precise view on where something settles, with very little capital at risk. The payoff peak is sharp and only exists at expiry.
What goes wrong
- The profit zone is narrow and the peak is only reached at expiry.
- Three strikes, four contracts — execution costs eat a low-premium trade.
- Usually expires worthless, which is the price of the asymmetry.
Try it properly
The chart above is the real pricing model, limited to three sliders. To change strikes, add legs, switch to futures, or price it against your own volatility assumption, open it in the options P&L calculator — the link under the chart carries this exact position across.
Education, not advice. Payoffs ignore commission, bid-ask spread, assignment risk and financing.