The Broken-Wing Butterfly

Break the symmetry, change the trade

A standard butterfly has symmetric wings — equal distances from the body strike on both sides. A broken-wing butterfly deliberately widens one wing. The structure is still three strikes for a directional butterfly (two long, one short stacked at the body) or four strikes for an iron broken-wing, but the wings are uneven. That asymmetry does two things: it tilts the payoff toward a direction, and it can flip the net premium from debit to credit.

Example with calls. Standard call butterfly: long 95, short 100 (two contracts), long 105. Wings are five apart on both sides. Now break a wing: long 95, short 100 (two contracts), long 110. The upper wing is now twice as wide as the lower wing. The wider upper wing collects more premium back than the symmetric version. If the math lands right, the whole thing becomes a net credit instead of a net debit.

Why traders use them. A broken-wing call butterfly with a wider upper wing has a built-in bullish bias: if price drifts up toward the body strike, the trade prints big. If price falls instead, you collected a credit and lose nothing on that side. The downside is the wider-wing side — if price runs hard up past the long wing, you take a defined loss. So you are trading the symmetry of a standard butterfly for a directional opinion plus an asymmetric loss profile.

These structures are subtle and a chain of small mistakes can flip them into bad trades. Use a payoff visualizer on your platform every time you build one. Verify the credit/debit, the break-evens, and the location of max loss before you click send.

Recap: broken-wing butterfly = butterfly with one wider wing. Tilts the trade directional; can flip the structure to a net credit with 'no risk' on one side. Always verify on a payoff visualizer.