Iron Condor vs Iron Butterfly
Both sell volatility with a capped loss: a sold put spread and a sold call spread around the price. The butterfly sells both inner options at the same strike, at the money; the condor sells them apart, out of the money. That one choice trades a bigger credit for a wider range.
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Side by side, live
| Short Iron Condor | Short Iron Butterfly | |
|---|---|---|
| Net Cost? | -$602.20 | -$797.20 |
| Max Profit? | $602.20 | $797.20 |
| Max Loss? | -$397.80 | -$202.80 |
| Breakeven(s)? | $84397.80, $87602.20 | $85202.80, $86797.20 |
| Prob. of Profit? | 27% | 14% |
| Delta? | 0.0074 | 0.0029 |
| Theta? | 10.3272 | 3.4101 |
| Vega? | -7.3124 | -2.5950 |
Both built on the same venue, asset and expiry, at execution prices with fees, exactly as each strategy's own page shows them; open either one to change strikes or width.
The difference
- Credit and maximum profit: the butterfly sells at-the-money options, the most expensive ones, so it collects more. The condor sells cheaper out-of-the-money options and collects less.
- Where it pays: the butterfly earns its maximum only if the price ends exactly at the middle strike, and less the further it ends from it. The condor earns its full credit anywhere between its two sold strikes.
- Breakevens: the butterfly's are the middle strike plus and minus the credit; the condor's are the sold put minus the credit and the sold call plus the credit, usually a wider band.
- Greeks: both are short vega and collect theta. The butterfly carries more gamma around the middle strike, so its value swings more with small moves as expiry nears.
When each one fits
The condor fits a view that the price stays in a range without saying where inside it: a higher probability of keeping some profit, for a smaller credit. The butterfly fits a view that the price ends near a specific level, often the current one, with implied volatility high enough to make the sold at-the-money options rich: a bigger potential profit, earned in full only near one price.
What to watch
The distance to the wings sets the maximum loss for both. Compare the reward to risk and the probability of profit side by side above, at today's prices: a structure that pays more usually wins less often. Both lose most when the price breaks out of the range fast, so the sold strikes' delta is the number to follow once the trade is on.
Educational content, not investment advice. See the disclaimer.