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Broken-Wing Butterfly Calculator

Broken-wing butterfly profit equals long lower call value minus two short middle call obligations plus long upper call value minus net debit.

Expiration scenarios

Solution

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Educational estimate only, not financial advice. Results exclude commissions, taxes, slippage, dividends, assignment risk, margin, and broker-specific rules. Verify before trading options.

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Broken-Wing Butterfly Formula

This call broken-wing butterfly uses uneven wing widths, so one tail can carry more risk than the other.

Worked Examples

Load these examples to compare common broken-wing butterfly payoff outcomes.

BROKEN WING

Compare unequal butterfly wings

The upper wing is wider than the lower wing, creating tail risk.

  • Enter the manual prices and assumptions.
  • Review the calculated risk, reward, and break-even metrics.
  • Compare the chart with the highlighted scenario.

Result: the calculator updates the scenario metrics and chart from those inputs.

Real fills, fees, and broker margin rules are not modeled.

How It Works

A broken-wing butterfly changes one wing width to shift credit, risk, and the payoff peak.

Example Problem

Use one long lower call, two short middle calls, and one long upper call with uneven wings.

  1. Calculate net debit or credit.
  2. Compare the two wing widths.
  3. Evaluate payoff at each critical strike.
  4. Find best and worst cases.

Uneven wings can move risk into one tail.

Key Concepts

The body strike is usually the best-case zone; the wider wing controls tail risk.

Applications

  • Designing asymmetric neutral trades.
  • Checking BWB credits.
  • Comparing tail risk before entry.

Common Mistakes

  • Assuming both tails have equal risk.
  • Ignoring the wider wing.
  • Forgetting two short contracts at the body.

Frequently Asked Questions

What does the Broken-Wing Butterfly Calculator calculate?

It calculates the selected options result from manual inputs, without requiring live stock or option quotes.

Does this calculator need live market data?

No. Enter the prices, premiums, volatility, days, or Greeks yourself. The calculator uses those manual inputs only.

Are commissions, taxes, margin interest, and assignment fees included?

No. The result excludes commissions, fees, taxes, borrow costs, slippage, and broker-specific margin rules.

Why can real trading results differ?

Real option prices can change with implied volatility, liquidity, dividends, early assignment, and execution prices.

Reference:

Standard options payoff, probability, and risk-management formulas.

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