What is a Short Put Butterfly?
A Short Put Butterfly uses puts instead of calls to achieve the same payoff as a Short Call Butterfly. You sell 1 upper-strike Put, buy 2 middle-strike Puts, and sell 1 lower-strike Put — all at equal intervals. You receive a small net credit upfront. You profit if the stock makes a significant move away from the middle strike.
The payoff profile is identical to a Short Call Butterfly — small credit at entry, profit if stock moves significantly, loss if stock pins near center. The choice between using calls or puts depends on the relative pricing and your broker's margin requirements. In practice, both Short Butterfly variations deliver the same economic outcome.
Like the Short Call Butterfly, this is a bet that the market will move — you just don't know (or care) which direction. You're paid a small credit for taking the risk that the market stays exactly where it is.
At a Glance
Max Profit
Small net credit received
Max Loss
Wing Width − Credit (at center)
Breakeven
Center ± (Wing Width − Credit)
Type
Credit · 3 Legs (Puts)
How to Set It Up
| Action | Type | Strike | Expiry | Qty |
|---|
| Sell | Put (PE) | Upper Strike | Same expiry (25–40 DTE) | 1 Lot |
| Buy | Put (PE) | Middle Strike (×2) | Same expiry | 2 Lot |
| Sell | Put (PE) | Lower Strike | Same expiry | 1 Lot |
P&L Simulator
Short Put Butterfly
📊 Short Put Butterfly — Payoff Chart + P&L Calculator
Index Price: 22000 · Upper Strike – Sell: 22300 · Middle Strike – Buy×2: 22000 · Lower Strike – Sell: 21700 · Upper Put Premium: 200 · Middle Put Premium: 145 · Lower Put Premium: 90 · Lot Size: 75 · Price at Exit: 21400
When Should You Use This Strategy?
✓ When to Use / ✕ When to Avoid / ◉ IV / ◷ DTE
3 use items · 3 avoid items
⊞ Trade Table
0 legs · 4 scenarios
Key Points
- Economically identical to a Short Call Butterfly — same payoff, same risk, different option type. Choose based on relative pricing.
- Maximum loss occurs exactly at the middle strike at expiry — set alerts and monitor closely as expiry approaches.
- The credit received is small relative to the maximum loss. Use this for speculative positions, not as a core income strategy.
- In Indian markets, put pricing often differs from call pricing due to skew — check both structures to find the better credit.
#Multi-Leg Strategies
Disclaimer
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