Butterfly Spread Explained - The Long Call Butterfly
Reviewed by Leon Moyer - Published October 9, 2026 - Last reviewed October 9, 2026
In this lesson
Build a long call butterfly, calculate its debit, maximum profit and break-evens, and explain why much of its gain arrives close to expiration.
A long call butterfly is a three-strike options strategy that buys one lower-strike call, sells two middle-strike calls and buys one higher-strike call, all at the same expiration, so that it costs a small debit and pays the most if the stock finishes exactly at the middle strike.
It is a low-cost, defined-risk way to bet on a stock staying put, and unlike the iron condor and iron butterfly it is opened for a debit rather than a credit. With XYZ at $50, the butterfly in this lesson costs $174, can be worth up to $500 at expiration, and profits if XYZ finishes between $46.74 and $53.26. The catch is timing: even if XYZ sits on $50 the whole time, about half of the gain only shows up in the final week.
How is a long call butterfly built?
A butterfly uses three equally spaced strikes:
- Buy 1 lower-strike call (the lower wing).
- Sell 2 middle-strike calls (the body).
- Buy 1 higher-strike call (the upper wing).
It is four contracts, but only three strikes. You can also read it as two vertical spreads: a bull call spread (buy 45, sell 50) plus a bear call spread (sell 50, buy 55). Below the body, the bull spread gains; above it, the bear spread gives the gains back. The long 55 call is what stops the loss from growing above $55.
The three pieces of a long call butterfly
Buy 1 XYZ 45 call
Lower wing
Pay $5.62 ($562)
Sell 2 XYZ 50 calls
The body
Collect 2 x $2.24 ($448)
Buy 1 XYZ 55 call
Upper wing
Pay $0.60 ($60)
Gray line: zero, where the position breaks even. Dashed line: strike. Each sketch shows profit or loss at expiration as the stock price rises from left to right.
Worked example
Long call butterfly example: the XYZ 45/50/55
XYZ trades at $50 with 45 days to expiration. Using the free calculator's model prices at 30% implied volatility, rounded to the cent:
- Net debit: $5.62 - (2 x $2.24) + $0.60 = $1.74 per share, or $174.
- Maximum loss: $174, if XYZ finishes at or below $45 (every call expires worthless) or at or above $55 (the gains and losses cancel out).
- Maximum profit: ($5.00 strike width - $1.74) x 100 = $326, if XYZ finishes exactly at $50.
- Break-evens: $45 + $1.74 = $46.74 and $55 - $1.74 = $53.26.
Illustrative and hypothetical. The ticker and prices are invented for teaching, and the figures exclude commissions, fees, margin interest and taxes, which reduce real results. Past or hypothetical outcomes do not indicate future results.
The XYZ 45/50/55 long call butterfly at expiration
Hover or tap the chart, or focus it and use the arrow keys, to read any price.
Open this trade in the free calculatorShow as table
What are a long call butterfly's max profit, max loss and break-evens?
- Maximum loss = the net debit, times 100.
- Maximum profit = strike width - net debit, times 100, at exactly the middle strike.
- Break-evens = lower strike + debit, and upper strike - debit.
The Options Industry Council's long call butterfly page gives the same formulas. Because the most you can lose is what you paid, the risk is defined in both directions, the same as buying a single option.
Is a long call butterfly the same as an iron butterfly?
Almost. With the same 45/50/55 strikes, the iron butterfly has the same tent-shaped payoff, peaking at $50 and flat beyond $45 and $55. Its numbers nearly match too: the iron butterfly risks $177 to make $323, and the long call butterfly risks $174 to make $326. In both cases the maximum profit plus the maximum loss equals the $500 strike width; the few dollars of difference come from interest and rounding.
So why pick one over the other?
- Debit or credit. The call butterfly is paid for up front; the iron butterfly is sold and holds margin.
- Which options are in the money. The call butterfly's 45 call is in the money from the start. The iron butterfly's in-the-money short leg depends on which side of $50 the stock is.
- Fills. Calls only, in a 1-2-1 ratio, may quote differently from the four-leg iron version. Compare the net prices before you choose.
Why does a butterfly spread pay off so late?
Before expiration, the two short 50 calls still carry a lot of time value, and that holds the butterfly's price down even when XYZ is right on the body. The model shows how slowly the value builds:
A butterfly pays late: its value with XYZ still at $50
Butterfly value with XYZ at $50
With XYZ still at $50, the butterfly is worth about $240 with 21 days left, $335 with a week left and $437 the day before expiration, against the $500 it reaches at expiration. That has two consequences:
- Patience is part of the trade. Closing a winning butterfly early usually means taking much less than the maximum.
- Expiration risk is part of the trade too. The biggest payoff needs the stock right at the body on the last day, which is exactly where you cannot be sure whether your short calls will be assigned. The OIC calls this an "extremely high expiration risk" situation. Managing an Iron Condor covers pin risk in detail.
A butterfly also has a timing view on volatility. Early on it is short vega, so a rise in implied volatility usually hurts it; close to expiration with the stock near the body, the main driver is simply where the stock is.
Check your understanding
You buy a 95/100/105 call butterfly for $1.20. What are the maximum loss, maximum profit and break-evens?
Show answer
Maximum loss is $120. Maximum profit is ($5.00 - $1.20) x 100 = $380 at exactly $100. Break-evens are $96.20 and $103.80.
XYZ finishes at $58. What is the 45/50/55 butterfly worth, and why?
Show answer
Zero. The long 45 call is worth $13 and the long 55 call $3, but the two short 50 calls cost $16. The legs cancel, so you lose the $174 debit.
With 21 days left XYZ is exactly at $50, but your butterfly is worth only about $240. Has something gone wrong?
Show answer
No. The short body calls still hold time value, which keeps the butterfly's price down. Much of a butterfly's gain arrives in the last days before expiration.
Key takeaways
- A long call butterfly buys one low call, sells two middle calls and buys one high call, all with equal spacing and one expiration.
- Maximum loss is the debit; maximum profit is strike width minus the debit, at exactly the middle strike.
- Break-evens are the lower strike plus the debit and the upper strike minus the debit.
- It has nearly the same payoff as an iron butterfly with the same strikes, bought for a debit instead of sold for a credit.
- About half of its gain arrives in the final week, which is also when pin and assignment risk are highest.
Common questions
How does a butterfly spread make money?
It makes the most if the stock finishes exactly at the middle strike at expiration. A long call butterfly costs a small debit and can be worth up to the width between strikes if the stock is pinned there.
What is the max loss on a long call butterfly?
The net debit paid, times 100, plus fees. On the 45/50/55 example bought for $1.74 that is $174, lost if the stock finishes at or below $45 or at or above $55.
Is a long call butterfly the same as an iron butterfly?
They have almost the same payoff shape with the same strikes. The long call butterfly uses only calls and is bought for a debit; the iron butterfly uses puts and calls and is sold for a credit.
Why do butterfly spreads gain value slowly?
Before expiration, the time value left in the two short options holds the butterfly's price down. About half of the gain arrives in the last week, and only if the stock is near the middle strike.