Value-Trades

Iron Butterfly Strategy: Real Trade Example


Real Example (July 2025)

An iron butterfly involves selling an at-the-money straddle (call and put) and buying one out-of-the-money call and one out-of-the-money put. It is a limited-risk, limited-reward neutral strategy.
  • Stock: XYZ Corp
  • Outlook: Low volatility / range-bound
  • Setup: Sell 1 $100 Call @ $4.00, Sell 1 $100 Put @ $4.00, Buy 1 $105 Call @ $1.00, Buy 1 $95 Put @ $1.00
  • Net Credit: $6.00 ($600 per contract)
  • Max Gain: $600
  • Max Loss: $400
  • Breakeven: $94 and $106

Outcomes

Stock PriceTotal ValueProfit/Loss
$100$0+$600
$94-$6.00-$400
$106-$6.00-$400

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