Butterfly Spread: The Surgical Strike

When you know exactly where price will land, the butterfly pays better than anything else. The structure, the variants, and the read that justifies the trade.

OptionsDeck Research 2 min readUpdated May 15, 2026

The butterfly is the most surgical structure in options. It bets on a specific price at a specific time — and pays asymmetrically when it's right. This is the trade for high-conviction "this is the magnet strike" reads, not for general directional speculation.

Long Call Butterfly

Buy one call at lower strike A
Sell two calls at middle strike B (B > A)
Buy one call at upper strike C (C − B = B − A)
Pay small net debit
Max profit at strike B at expiration
Max loss = debit if price expires outside the wings

Long put butterflies are mechanically equivalent — same payoff, just constructed with puts. Use whichever leg type has tighter spreads on your chain.

Broken-Wing Butterfly

A butterfly where the upper wing is wider (or narrower) than the lower wing. Common variant: long 1 call ATM, short 2 calls +5 strikes, long 1 call +15 strikes. The unbalanced wings shift the breakeven and can sometimes set up for net credit — a "no risk on one side" trade if priced right.

The OPEX-week butterfly

Friday of monthly options expiration is when butterflies pay their highest reward-to-cost. Dealer GEX is at its most magnetic in the final hours — open interest concentrations exert their strongest pull. A butterfly centered on the heaviest call wall or the gamma flip, placed Thursday afternoon for Friday close, regularly pays 5-15x on the right setup. The wrong setup pays zero. Size small.

Where OptionsDeck helps

Open the dealer GEX heatmap to identify the Magnet Strike — the largest absolute gamma bar. Center your butterfly there. Cross-check with the GEX reading methodology. Build the exact structure in the strategy builder to see the precise P/L cone around your center strike.

Frequently asked questions

What is a butterfly spread?

Three strikes, four contracts, all in the same expiration. Long one wing, short two middle, long the other wing — equally spaced. The trade profits if the underlying pins at the middle (body) strike at expiration. Low cost, defined risk, high reward-to-cost ratio when it works.

When does a butterfly make more sense than an iron condor?

When you have a specific price target. The condor wins inside a range; the butterfly wins at a specific level. If dealer GEX shows a clear magnet strike, the butterfly centered on that strike can pay 5-10x on a small debit.

What's a broken-wing butterfly?

A butterfly with uneven wing widths — the upper wing is wider than the lower (or vice versa). This shifts the breakeven and can sometimes be set up for a net credit. Useful when you want directional bias inside the structure.

How do I pick the body strike?

Two strong methods. (1) Dealer GEX Magnet Strike — the strike with the largest absolute gamma. Dealers' hedging pulls price there. (2) Prior open interest concentration — where retail and institutional flow has clustered. Both methods agree about 70% of the time.

What's the catch?

Probability. A standard butterfly has a narrow profit zone. If your magnet strike thesis is wrong by even one strike, you take the full debit loss. The trade is binary in a way condors aren't. Size accordingly — butterflies are explicitly small-position, high-conviction bets.

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