Compare a target-centered butterfly with a range-based iron condor across credit, profit zone, Greeks and forecast precision.
Expiration shape
The long butterfly creates a triangular peak at its body and loses outside the wings. A short iron condor creates a flat maximum-profit zone between two separated short strikes and loses beyond its outer wings.
Forecast
Use a butterfly when analysis supports a specific expiration target. Use an iron condor when the primary thesis is that price remains within a broader range rather than pinning one level.
Cash flow and Greeks
A long butterfly normally pays a debit. A short iron condor receives credit and often starts positive theta and negative vega. Exact Greeks change with strikes and current price.
Management
A butterfly may benefit from moving toward its body, while a condor is threatened near either short strike. Adjustment triggers and remaining reward therefore require different rules.
A practical example
At $100, a 95/100/105 butterfly peaks only at $100. A 90/95/105/110 iron condor can retain maximum profit anywhere from $95 through $105.
This simplified example focuses on one structure and selected expiration outcomes. Live option prices also reflect the underlying price, time decay, rates, dividends, liquidity and transaction costs. Greeks are theoretical estimates, not guarantees.
Frequently asked questions
Which has a wider maximum-profit zone?
The iron condor.
Which can offer a higher peak?
A butterfly may, but only near its body.
Are both defined-risk?
Yes, when constructed and maintained correctly.
Continue the Butterfly Spreads cluster
Explore related guides: Broken Wing Butterfly Explained · How to Adjust a Butterfly Spread · Butterfly Spread Profit, Loss and Breakevens. For a structured sequence, use the free Level 12 – Butterfly Spread course.
Options involve risk and are not suitable for every investor. This material is educational and is not investment, tax or legal advice. Greeks are theoretical estimates, and contract terms and broker requirements can vary.