Long Butterfly

Pinpoint bet on a specific strike at expiration. Outlook: neutral. Direction: debit. Risk: defined.

A long butterfly is a three-strike structure: long one lower-strike call, short two middle-strike calls, long one upper-strike call, with all three strikes equidistant. Net debit. The position achieves maximum profit if the underlying finishes exactly at the middle strike at expiration.

Butterflies are the highest-leverage structure for betting on a specific price level at a specific date. They have tiny debits relative to a large potential payoff, but require the underlying to actually pin the middle strike.

Break-Even

Two break-evens: lower-strike + net debit and upper-strike − net debit.

Max Profit

(Spread width − net debit) × 100 × contracts, achieved only if spot = middle strike at expiration.

Max Loss

Net debit × 100 × contracts, realized if spot finishes outside the outer strikes.

When to Use

• You have a specific price target at a specific expiration (e.g., max-pain pinning).
• Extremely asymmetric risk/reward on a pin trade: small debit, large possible payoff.
• Low-IV environment where premium is cheap.
• Specific thesis: "this stock will close within $2 of $100 on Friday."

Common Pitfalls

• Max profit requires the underlying to pin the middle strike almost exactly, which is rare.
• Realistic profit is much less than the theoretical max on intraday or near-expiration moves.
• Any meaningful move in either direction kills the position.
• Bid-ask spreads on 4-leg structures can eat significant edge; execute as a multi-leg order.

Try This on a Live Ticker

The strategy builder applies any structure to a live ticker with real Greeks and expiration P/L: SPY · QQQ · AAPL · NVDA · TSLA.