Long Put Butterfly
Neutral — expecting the stock to pin near the middle strike, often used as a cheap directional put structure when placed OTM below the current price
Risk Profile at a Glance
How to Construct the Long Put Butterfly
- 1.Buy 1 put at strike C (higher)
- 2.Sell 2 puts at strike B (middle)
- 3.Buy 1 put at strike A (lower)
- 4.All same expiration, equally spaced strikes
- 5.Net debit
Understanding the Long Put Butterfly
The long put butterfly has the same payoff structure as the long call butterfly but is built with puts. You buy a put at the highest strike, sell two puts at the middle strike, and buy a put at the lowest strike. Maximum profit when the stock pins at the middle strike; maximum loss (the small debit) when the stock is above the highest or below the lowest strike. Because puts and calls of the same strike and expiration have the same value by put-call parity, the long put butterfly and long call butterfly are theoretically equivalent — traders choose one based on available strikes, liquidity, and whether the structure is to be placed in-the-money or out-of-the-money.
Put butterflies are often preferred when targeting a level below the current price (a slightly bearish target) because the middle strike is more intuitively placed below the stock. In EdgeOS terms, placing a put butterfly with the middle strike at the lower ATR trigger creates a defined bet on the stock consolidating at support..
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 Put Butterfly options strategy?
The long put butterfly has the same payoff structure as the long call butterfly but is built with puts. You buy a put at the highest strike, sell two puts at the middle strike, and buy a put at the lowest strike.
When should I use the Long Put Butterfly?
Neutral — expecting the stock to pin near the middle strike, often used as a cheap directional put structure when placed OTM below the current price
What is the maximum loss on the Long Put 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 Put Butterfly compare to similar strategies?
The Long Put Butterfly is a neutral debit strategy. Compared to the Long Call Butterfly (neutral, debit), the Long Put 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.