---
title: "Iron Butterfly — options strategy"
type: "options-strategy"
topic: "Options strategies (Indian markets)"
category: "Income"
outlook: "Neutral / range-bound"
complexity: "advanced"
risk: "defined"
slug: "iron-butterfly"
url: "https://learn-derivatives.tapetide.com/strategies/iron-butterfly"
markdown_url: "https://learn-derivatives.tapetide.com/strategies/iron-butterfly.md"
source: "DeltaDesk by Tapetide"
---

# Iron Butterfly

> **In plain English:** A tighter, higher-paying iron condor. You sell at-the-money instead of out-of-the-money, so you collect more premium but the profit zone is narrower — you really need the price to pin one level.

**Category:** Income · **Market view:** Neutral / range-bound · **Complexity:** advanced · **Risk:** Defined

## Structure

- Sell ATM call
- Sell ATM put
- Buy ATM+4 strikes call
- Buy ATM-4 strikes put

## Summary

A short ATM straddle plus protective wings — higher credit, narrower profit zone than a condor.

## When to use it

Strong conviction the price pins a level at expiry, high IV.

## Profit & loss

- **Max profit:** Net credit (price expires at the ATM strike).
- **Max loss:** Limited to (wing width − net credit).

## Net Greeks profile

Strong positive theta, negative vega, short gamma.

## Margin

Margin-intensive (you sell options).

## Common mistakes

- Treating it like a condor (it has a much narrower max-profit point).

## India example

Sell an ATM NIFTY iron fly on expiry day to harvest theta with defined risk.

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**Build it live in the [DeltaDesk Strategy Lab](https://learn-derivatives.tapetide.com/tools/strategy-lab)** — tune strikes and see payoff + net Greeks update instantly.

*Educational content only — nothing here is investment advice. Derivatives carry significant risk of loss. Tapetide is not a SEBI-registered research analyst or investment adviser.*