Short Butterfly
Sell 1 lower wing, buy 2 center body, and sell 1 higher wing options to collect net credit, profiting if price escapes the center pin.
Interactive Payoff Curve & Greeks Simulation
Visualize the theoretical profit & loss at expiry vs T+0 immediate day curves. Drag the simulation slider to stress-test your trade.
Option Payoff Curve & Greeks
Net Option Greeks (Sensitivity Profile)
Values per 1 Lot standard unitMulti-Leg Position Structure (3 Legs)
| Action | Instrument / Strike | Type | Expiry | Approx Delta | Est. Premium | Qty Ratio |
|---|---|---|---|---|---|---|
| SELL | 24,200 CE (Lower Wing) | CALL | Monthly Expiry | +0.65 | ₹420 | 1x |
| BUY | 24,500 CE (Center Body) | CALL | Monthly Expiry | +0.50 | ₹240 | 2x |
| SELL | 24,800 CE (Upper Wing) | CALL | Monthly Expiry | +0.30 | ₹110 | 1x |
How the Structure Works
A defined-risk volatility breakout strategy.
The Short Butterfly is the exact inverse of the Long Butterfly. You sell the wings and buy 2 center body options, collecting a net credit. You make profit if the market moves away in either direction.
Institutional Strike Selection Rules
Phased Execution Blueprint
Follow this structured sequence to eliminate emotional hesitation during order entry, lifecycle management, and final exit.
Breakout Expectation
Deploy when expecting an exit from consolidation.
Interactive Margin & Position Size Calculator
Calculate exact lot sizing based on the 1-2% risk rule to preserve capital against Black Swan events.
Options Position Size & Max Risk Calculator
Total net liquid equity in your brokerage account
Recommended: 1.0% - 2.0% for disciplined longevity
Wing width max loss or defined mental/system SL
Rigorous Risk Rules & Adjustment Protocols
Non-negotiable parameters for stop-loss triggers, portfolio caps, and firefighting adjustments when market tests your strikes.
- Close on breakout.
SEBI hedged margin applies.
NIFTY Short Butterfly Trade Walkthrough
Nifty broke out of 24,500 base.
Sold wings / Bought 2x 24500 CE (Credit = ₹50)
- Captured full credit on clean breakout.
Common Mistakes to Avoid
Why it happens: Max loss occurs at center.
Solution: Cut early if market refuses to move.
Institutional Pro Tips
Short Butterfly FAQs
When should I use a Short Butterfly?
When you expect a stock to move sharply in either direction with strictly defined risk.
Alternative & Complementary Strategies
Buy 1 lower wing, sell 2 center body, and buy 1 higher wing options for a small debit, targeting a pin at the center strike.
Buy an OTM Call Debit Spread and an OTM Put Debit Spread to capture massive breakout moves with capped defined risk and lower cost than a strangle.
Buy an ATM Call and an ATM Put at the same strike, profiting from explosive breakout moves in EITHER direction.