Long Call Butterfly option strategy
Long Call Butterfly is a range bound strategy that offers decent reward/risk along with low cost. In scenario where strike difference is not equal its is known as Modified Call Butterfly Spread.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ITM Call | 25,100 | 1 | 65 | ₹139.89 |
| SELL | ATM Call | 25,150 | 2 | 130 | ₹113.18 |
| BUY | OTM Call | 25,200 | 1 | 65 | ₹89.99 |
How it works
- Buy 1 ITM call at the 25,100 strike for ₹139.89, paying the premium.
- Sell 2 ATM calls at the 25,150 strike for ₹113.18 each, collecting the premium.
- Buy 1 OTM call at the 25,200 strike for ₹89.99, paying the premium.
- You pay a net ₹229 upfront for the position. This is the most you can lose.
Below 25,104 you lose, up to ₹229.
Between 25,104 and 25,198 you profit, up to ₹2,988.
Above 25,198 you lose, up to ₹229.
Set-up: Buy 1 lot ITM Call, Sell 2 lots ATM Calls and Buy 1 lot OTM Call.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | −₹229 |
| 24,400 | −3% | −₹229 |
| 24,900 | −1% | −₹229 |
| 25,150 | Unchanged | +₹3,021 |
| 25,400 | +1% | −₹229 |
| 25,900 | +3% | −₹229 |
| 26,650 | +6% | −₹229 |
How the Greeks affect it
When to use
When you are looking to execute a potentially high-yielding trade at a very low cost, where your maximum profit occurs if the stock is at the middle strike price at expiration;Ideal when one is anticipating very low volatility in the stock price.
- It helps to participate in high yielding trade with relatively low cost.
- Being completely hedge one can hold on to the stock till expiry.
- Promising Reward to risk provides good odds to wins as stock has ample of room to perform.
Things to watch
- Time decay is generally harmful when stock is near first strike or third strike and beneficial if stock price is near middle strike.
- Maximum loss is capped.
- Strike selection is a key to garner maximum benefit.
Long Call Butterfly: questions
What is a Long Call Butterfly strategy?
Long Call Butterfly is a range bound strategy that offers decent reward/risk along with low cost. In scenario where strike difference is not equal its is known as Modified Call Butterfly Spread.
When should you use a Long Call Butterfly?
When you are looking to execute a potentially high-yielding trade at a very low cost, where your maximum profit occurs if the stock is at the middle strike price at expiration;Ideal when one is anticipating very low volatility in the stock price.
How do you set up a Long Call Butterfly?
Buy 1 lot ITM Call, Sell 2 lots ATM Calls and Buy 1 lot OTM Call.
What is the maximum profit of a Long Call Butterfly?
Maximum risk is the net debit of the bought and sold options. Maximum reward is the difference between adjacent strike prices less the net debit. (Strikes are equidistance from each other).
What is the maximum loss of a Long Call Butterfly?
It is Net debit Strategy. However Net cost to establish is very low.
What is the breakeven of a Long Call Butterfly?
With Nifty at 25,151, the example on this page breaks even at 25,104 and 25,198 at expiry.