Iron Butterfly: Higher credit than Iron Condor — but only if the market pins exactly at your strike
July 18, 2026
What is an Iron Butterfly?
An Iron Butterfly is an Iron Condor where both short strikes are at the same ATM level. You sell both an ATM Call and an ATM Put (a Short Straddle) while buying OTM wings for protection. This generates higher premium than an Iron Condor but has a much narrower profit zone — maximum profit only if the stock pins exactly at the strike at expiry.
Nifty at ₹22,000. You sell the 22,000 CE for ₹150 and 22,000 PE for ₹140 (Short Straddle), and buy the 22,500 CE for ₹30 and 21,500 PE for ₹25 (wings). Net credit: ₹235. But your max profit zone is very narrow — Nifty must stay close to 22,000.
At a Glance
Max Profit
Net Credit — at exact strike
Max Loss
Wing Width − Net Credit
Breakeven
Strike ± Net Credit
Type
Credit · 4 Legs
How to Set It Up
Action
Type
Strike
Expiry
Qty
Buy
Put (PE)
OTM Lower Wing
Same expiry
1 Lot
Sell
Put (PE)
ATM Strike
Same expiry
1 Lot
Sell
Call (CE)
ATM Strike
Same expiry
1 Lot
Buy
Call (CE)
OTM Upper Wing
Same expiry
1 Lot
P&L Simulator
Iron Butterfly
📊 Iron Butterfly — Payoff Chart + P&L Calculator
Index Price: 22000 · ATM Strike: 22000 · Wing Width: 500 · Net Credit Received: 235 · Lot Size: 75 · Price at Exit: 22000
When Should You Use This Strategy?
✓ When to Use / ✕ When to Avoid / ◉ IV / ◷ DTE
3 use items · 3 avoid items
#Multi-Leg Strategies
Disclaimer
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