Long Put Butterfly option strategy
Long Put Butterfly is a range bound strategy that offers decent reward/risk along with low cost.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | OTM Put | 25,100 | 1 | 65 | ₹89.13 |
| SELL | ATM Put | 25,150 | 2 | 130 | ₹112.42 |
| BUY | ITM Put | 25,200 | 1 | 65 | ₹139.23 |
How it works
- Buy 1 OTM put at the 25,100 strike for ₹89.13, paying the premium.
- Sell 2 ATM puts at the 25,150 strike for ₹112.42 each, collecting the premium.
- Buy 1 ITM put at the 25,200 strike for ₹139.23, 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 Put, Sell 2 lots ATM Puts and Buy 1 lot OTM Put.
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
Long Put Butterfly is recommended when the trader is looking to execute a potentially high-yielding trade at very low cost, where your maximum profits occur if the stock is at the middle strike price at expiration. One is anticipating very low volatility in the stock price. In scanraio where strike diffence is not equal it is known as Modifien Put Butterfly Spread.
- It helps to participate in high yielding trade with relatively low cost. By being completely hedge one can hold to the short position till expiry. Promising Reward to risk provides good odds to wins as stock has ample room to fall.
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 Put Butterfly: questions
What is a Long Put Butterfly strategy?
Long Put Butterfly is a range bound strategy that offers decent reward/risk along with low cost.
When should you use a Long Put Butterfly?
Long Put Butterfly is recommended when the trader is looking to execute a potentially high-yielding trade at very low cost, where your maximum profits occur if the stock is at the middle strike price at expiration. One is anticipating very low volatility in the stock price. In scanraio where strike diffence is not equal it is known as Modifien Put Butterfly Spread.
How do you set up a Long Put Butterfly?
Buy 1 lot ITM Put, Sell 2 lots ATM Puts and Buy 1 lot OTM Put.
What is the maximum profit of a Long Put Butterfly?
This is a net debit trade, although the net cost is typically low. 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 equip-distance from each other).
What is the maximum loss of a Long Put Butterfly?
It is Net debit Strategy. However Net cost to establish is very low.
What is the breakeven of a Long Put Butterfly?
With Nifty at 25,151, the example on this page breaks even at 25,104 and 25,198 at expiry.