Call Broken Wing Butterfly

A Call Broken Wing Butterfly combines a Bull Call Spread with a wider Bear Call Spread. The unequal wings change the risk on either side of the position. It can be entered for a credit, but the credit is not guaranteed by the structure alone.

Names and related structures: Call skip-strike butterfly; unequal-wing call butterfly.

Market Outlook

The trader expects the stock to finish near the two short calls. In the credit version shown here, a fall below the lowest strike still leaves a small profit. A large rise is the unfavorable move. Choose the strikes around the intended price target rather than assuming every call butterfly is bullish.

Position Construction

Buy one lower-strike call, sell two middle-strike calls and buy one higher-strike call. Use the same expiration. Here, the upper wing is wider than the lower wing.

Hypothetical entry premiums per share
Action	Option	Expiration	Premium
Buy 1	$95 call	Same expiry	$7
Sell 2	$100 call	Same expiry	$5
Buy 1	$110 call	Same expiry	$2

Example

With XYZ at $100, buy the $95 call for $7, sell two $100 calls for $5 each and buy the $110 call for $2. The opening credit is $1 per share, or $100. At $100, the $95 call is worth $500 and the other options expire worthless, leaving $600 profit. At $110, the options lose $500 in total; the opening credit reduces the net loss to $400.

All amounts use a 100-unit contract multiplier and exclude commissions and fees. These prices illustrate the arithmetic; they are not current market quotes.

Payoff Diagram

Call Broken Wing Butterfly profit and loss at expiration — Expiration profit or loss for the example, including the opening premium; 100 shares per contract. Commissions, financing and assignment cashflows are excluded.

Underlying price	Expiration P/L
$80	$100
$95	$100
$100	$600
$106	$0
$110	−$400
$120	−$400

Maximum Profit

For this credit construction, maximum profit = (middle strike − lower strike + credit) × 100. The example earns at most $600, at $100 at expiration.

Maximum Loss

Maximum loss = (upper wing width − lower wing width − credit) × 100, provided this amount is positive. The example loses at most $400 at $110 or above. Below $95, it retains the $100 credit.

Breakeven Point(s)

The example has one breakeven: $100 + $5 + $1 = $106. In general, it is middle strike + lower wing width + credit when that price is inside the upper wing. A debit entry or a different wing arrangement changes the breakevens and tail results.

Risks and Position Management

Unequal wings put more risk on one side. The two short calls can be assigned separately, and exercise decisions near the middle strike can leave an unexpected stock position. A low entry cost does not mean that the larger wing has little risk.

Before expiration, option prices also reflect time remaining and volatility. The expiration diagram does not show every interim gain or loss. Trading costs reduce profits and increase losses. Review the contract’s exercise and settlement rules before trading.

Explore the Position

Try the Call Broken Wing Butterfly Calculator

Compare This Strategy

Optional further reading to help you compare the tradeoffs.

Butterfly vs Broken Wing vs Broken Heart Butterfly — First decide where the stock is expected to finish.
Call vs Put Broken Wing Butterfly — Choose the vulnerable side deliberately.

Structure reference: Strategy reference. Example premiums and calculations are illustrative. Editorial standards.

Advanced Strategy Variations

Build on the core strategies with these less common structures. Match the option legs and expirations when comparing names.