Snapshot
Legs
Buy 1 Low Call + Sell 2 Middle Calls + Buy 1 High Call
Outlook
Neutral / Target price at middle strike
Max profit
Width between middle and lower strike minus net debit paid
Max Loss
Net debit paid
A long call butterfly option strategy is created by buying one low-strike call, selling two middle-strike calls, and buying one high-strike call. All options share the same expiration date, and the middle strike sits halfway between the outer strikes. You pay a net debit to open the trade. Traders use this setup when they expect the stock price to land right at the middle strike price at expiration.
The maximum profit equals the difference between the middle strike and lower strike minus the initial net debit paid. This peak profit is earned if the stock closes exactly at the middle strike price at expiration. The maximum loss is capped at the initial net debit paid if the stock ends up outside the outer strike prices.
Example
Stock
$100
Trade
- Buy $95 Call for $6.00
- Sell two $100 Calls for $3.00 each
- Buy $105 Call for $1.00
→ $1.00 debit ($100)
Breakevens
$96.00 / $104.00
Outcomes
- Stock at $100: +$400 Max Profit
- Stock at $96 or $104: $0 Breakeven
- Stock ≤ $95 or ≥ $105: -$100 Max Loss