Options Income
Broken Wing Butterfly
A butterfly built with one wing wider than the other, so the credit collected can fully cover the narrower wing and remove risk from that side entirely, at the cost of a wider, more expensive wing on the other.
Drag each wing independently, watch the zones paint live
The body is fixed at the current price. Drag the two gold handles independently, left wing and right wing no longer have to match. As you drag, the strip directly under the payoff line repaints live: green where the structure profits, red where it loses, and a hatched gray band on either side where the credit received fully covers that wing's width, meaning that side truly cannot lose money.
Drag either gold circle, or use the sliders · body strike is fixed at the current price
How it works
- Same short strikes as an iron butterfly, different distance to each long strike. The short call and short put both sit at the current price. The long call and long put no longer sit the same distance out, one wing (the narrower one) can be set inside what the credit alone would cover.
- Max profit is still the net credit, only at the body strike. That part doesn't change from a standard butterfly. What changes is what happens once price moves past each wing.
- The narrower wing can go fully riskless if the credit covers it. If the total credit received is greater than or equal to that wing's width, the worst case on that side is zero or a small profit, never a loss, because the offsetting long option is close enough to fully hedge the short one for what was collected.
- The wider wing pays for that protection with a bigger cap. Max loss on the wider side is that wing's width minus the credit, and because the credit is fixed by the trade as a whole, a wider wing on one side means a larger dollar loss is possible if price runs hard in that direction.
Where this breaks
The riskless side isn't free, it's paid for by the other side
Making one wing effectively riskless doesn't create money from nothing. The credit that would have gone toward buying a wider hedge on the narrow side instead gets concentrated into a smaller number of points, which means the wing left wider has a bigger gap between the short strike and its protection, and a bigger dollar loss if price runs through it. Drag the right wing wide enough to flip the badge on and watch the max-loss stat on that side grow at the same time. A broken wing butterfly doesn't remove risk from the trade, it moves risk from one side to the other and concentrates it there.