Multi-leg strategies
What is an Iron Butterfly and how does it differ from a standard Iron Condor?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
An Iron Butterfly sells a call and put at the same at-the-money strike while buying protective wings further out, concentrating maximum profit at a single price point rather than a range.
How it works
Compared to an Iron Condor's wider profit zone, the Iron Butterfly collects more premium but requires price to land very close to the short strike at expiration for full profit.
An example
Sell the 100 call and 100 put, buy the 110 call and 90 put, creating a position with peak profit exactly at $100 and a narrower profitable range than a condor.
Risk & limitations
The narrow profit zone means small price moves can quickly erode gains; this structure carries no assured return and performs poorly if the underlying is volatile.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.