Iron Condor vs Iron Butterfly
Understand the key differences between iron condors and iron butterflies to choose the right neutral strategy for your market outlook.
What is This comparison?
This comparison Both iron condors and iron butterflies are neutral options strategies that profit from range-bound markets, but differ significantly in profit zone width and max profit potential.
Iron condors offer wider profit zones with lower max profit, while iron butterflies concentrate profit at a single strike with higher max profit but lower win rates.
Quick Comparison
| Feature | Iron Condor | Iron Butterfly |
|---|---|---|
| Max Profit | Net credit received | Net credit - higher than condor |
| Max Loss | Wing width minus credit | Wing width minus credit |
| Break Even | Two points (short strikes +/- credit) | Two points (ATM strike +/- credit) |
| Best For | Wide range-bound markets | Tight consolidation near a price |
| Win Rate | 65-75% | 50-60% |
| Complexity | Intermediate | Intermediate |
| Capital Required | $2,000-5,000 | $2,000-5,000 |
Feature-by-Feature Comparison
When to Use Iron Condor
Choose iron condor when you expect the stock to stay within a wider range and prioritize higher win rate over max profit. Ideal when IV is high and you want more room for error.
Learn Iron CondorWhen to Use Iron Butterfly
Choose iron butterfly when you expect the stock to pin near a specific price and want higher profit potential with a lower win rate. Best for low-movement scenarios like post-earnings drift.
Learn Iron ButterflyIron Condor Structure
- Buy 1 OTM put (protection)
- Sell 1 OTM put (closer to ATM)
- Sell 1 OTM call (closer to ATM)
- Buy 1 OTM call (protection)
Iron Butterfly Structure
- Buy 1 OTM put (protection)
- Sell 1 ATM put (same strike as call)
- Sell 1 ATM call (same strike as put)
- Buy 1 OTM call (protection)
Frequently Asked Questions
What is the difference between an iron condor and iron butterfly?
An iron condor uses OTM options for both spreads, creating a wider profit zone. An iron butterfly uses ATM options for the short strikes, creating a narrower profit zone but higher max profit. Iron condors have higher win rates (~70%) while iron butterflies have higher profit potential with lower win rates (~55%).
Which is more profitable: iron condor or iron butterfly?
Iron butterflies have higher maximum profit potential per trade. However, iron condors have higher win rates due to the wider profit zone. Over many trades, iron condors often produce more consistent returns due to the higher probability of success.
Related Strategies
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