Long Call Butterfly
Neutral — expecting the stock to pin near the middle strike at expiration; want a low-cost, high-reward-to-risk structure targeting a specific price level
Risk Profile at a Glance
How to Construct the Long Call Butterfly
- 1.Buy 1 call at strike A (lower)
- 2.Sell 2 calls at strike B (middle)
- 3.Buy 1 call at strike C (upper)
- 4.All same expiration, equally spaced strikes (A < B < C)
- 5.Net debit
Understanding the Long Call Butterfly
The long call butterfly is a three-strike neutral strategy designed to profit when the stock pins at the middle strike at expiration. You buy calls at the outer strikes and sell two calls at the middle strike. Maximum profit occurs when the stock is exactly at the middle strike at expiration — the sold calls expire at-the-money while the lower long call has full value and the upper long call has no value. Maximum loss (the debit paid) occurs if the stock is below the lower strike or above the upper strike at expiration.
The butterfly is extremely capital-efficient: the risk/reward ratio can be 1:5 or better when the strikes are well-chosen. Professional traders use call butterflies to target specific price levels — when EdgeOS shows a stock consolidating between the upper and lower ATR triggers with a bull count in the 2–5 range, the ATR trigger and ATR level become natural butterfly strike candidates. The low cost makes this a high-probability capital-efficient bet on a price pin..
When to Use It — EdgeOS Signal Integration
- ✓Use when no active bull or bear EdgeOS count — the stock is in chop / reset mode
- ✓Extension score near zero — stock is pinned at the ATR mid-level, no directional bias
- ✓Market breadth is neutral (SCTR breadth 45–55%) — range-bound conditions expected
Compare with Similar Strategies
Other Butterflies Strategies
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Frequently Asked Questions
What is the Long Call Butterfly options strategy?
The long call butterfly is a three-strike neutral strategy designed to profit when the stock pins at the middle strike at expiration. You buy calls at the outer strikes and sell two calls at the middle strike.
When should I use the Long Call Butterfly?
Neutral — expecting the stock to pin near the middle strike at expiration; want a low-cost, high-reward-to-risk structure targeting a specific price level
What is the maximum loss on the Long Call Butterfly?
The maximum loss is fully defined at entry: the net debit paid (for debit strategies) or the spread width minus the credit received (for credit spreads). You can never lose more than this amount.
How does the Long Call Butterfly compare to similar strategies?
The Long Call Butterfly is a neutral debit strategy. Compared to the Iron Butterfly (neutral, credit), the Long Call Butterfly has limited max risk and limited max reward. Your choice depends on your directional bias, IV environment, and risk tolerance. The TraderValue strategy comparison tool lets you see the exact payoff differences side by side.