Value-Trades

Short Call Butterfly Strategy: Real Trade Example


Real Example (July 2025)

A short call butterfly involves selling one lower strike call, buying two at-the-money calls, and selling one higher strike call. It is a net credit trade that profits from significant price movement away from the center.
  • Stock: XYZ Corp
  • Outlook: Expecting high volatility
  • Setup: Sell 1 XYZ $95 Call @ $6.00, Buy 2 XYZ $100 Calls @ $3.50, Sell 1 XYZ $105 Call @ $1.50
  • Net Credit: $0.50 ($50 per contract)
  • Max Loss: $4.50 ($450 per contract)
  • Max Gain: $50
  • Breakeven: $95.50 and $104.50

Outcomes

Stock Price at Expiration Total Value Profit/Loss
$95 $0 +$50
$100 -$5.00 -$450
$110 $0 +$50

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