Butterflies & broken wings
Neutral to bullish
Debit or credit
Risk: Defined; larger on the downside
Broken-wing put butterfly
Also called: Skip-strike put butterfly, Put BWB
A put butterfly whose lower wing sits further away: often entered for a small credit, with no loss above the top strike and a capped loss below.
Payoff sketch (per unit, index points)
At expiry
Today (7 days left)
Net premium
Debit 17 pts
Max profit
+183 pts (₹11,913 per lot)
Max loss
−117 pts (₹7,587 per lot)
Breakeven
24,617 / 24,983
How it works
Moving the lower wing out cheapens it, so the two sold puts can pay for both bought puts. If the price stays above the top strike, every option expires worthless and the credit (if any) is kept.
The cost is a larger loss below the lower wing: the extra gap between the wings is the risk being taken.
When traders use it
- A neutral-to-bullish view with a profit zone just below the price and no upside risk.
Greeks
| Delta | Slightly positive at entry. |
| Gamma | Negative near the middle strike. |
| Theta | Positive near the middle strike. |
| Vega | Negative. |
Profit, loss and margin
| Max profit | (Upper wing width + net credit, or − net debit) × quantity, at the middle strike. |
| Max loss | (Lower wing width − upper wing width − net credit, or + net debit) × quantity, below the lowest strike. |
| Breakeven | Below the middle strike, by the net premium and the wing difference. |
| Margin | About the maximum loss on the downside. |
In India
- SPAN margins the whole position, so a defined-risk spread usually blocks far less than its short leg alone. Brokers grant the hedge benefit only when the protective leg is actually in the account, which is why the long leg is usually placed first.
- STT is charged on the premium when an option is sold (0.15% of premium from 1 April 2026 in Arthfy's cost model). A short option left to expire, in or out of the money, is not charged STT again at settlement.
- A long option that finishes in the money is exercised automatically. STT is then charged on its intrinsic value at the exercise rate (0.15% from 1 April 2026 in Arthfy's cost model), instead of the sale rate on the premium (also 0.15%) that applies when the option is sold before the close. See the lesson on the STT exercise trap.
Arthfy numbers
Arthfy's history does not cover broken-wing butterflies yet; the bull put spread is the nearest covered shape. See Bull put spread.
Try it in the F&O hub
Opens the tool with this structure on today's NIFTY chain. Reading is free with an Arthfy account; some runs use free attempts.Open in the builderPayoff, Greeks, scenario grid and charges on today's NIFTY chain
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