Bullish BFLY

Bull Butterfly Strategy

A targeted bullish bet with an absurdly cheap entry price.

bullishdefined riskcheap entrytarget play

What is the Bull Butterfly Options Strategy?

A Bull Butterfly is a regular butterfly spread shifted above the current price. Instead of centering the body at the current price, you place it at your BULLISH TARGET. If the stock rallies to your target by expiry, the payoff is massive relative to the tiny cost.

Think of it as buying a lottery ticket with much better odds. You are saying: "I think this stock will be at exactly THIS price at expiry" — and you pay very little for that bet.

Why is it Called "Bull Butterfly"?

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"Bull" because the profit zone is above the current price (bullish). "Butterfly" because the payoff shape is the same tent/wing structure. The body strike is placed at your bullish target, not at the current price.

How Does the Bull Butterfly Trade Work?

  1. 1 Step 1 — Identify a bullish target price (e.g. a resistance level you expect the stock to reach).
  2. 2 Step 2 — That target becomes your center/body strike. Sell 2 calls there.
  3. 3 Step 3 — Buy 1 call one step below and 1 call one step above.
  4. 4 Step 4 — Pay the small net debit.
  5. 5 Step 5 — If the stock rallies to your target by expiry, massive return.

Types of Bull Butterfly Strategies

Most Common

Bull Call Butterfly

All three legs are calls. Body strike above spot. Cheap debit entry.

Bull Put Butterfly

All three legs are puts. Same payoff. Use if put pricing is better.

When to Use the Bull Butterfly Strategy?

  • ✓ When you have a specific bullish price target
  • ✓ On monthly expiry when stocks pin at round numbers or max pain levels
  • ✓ When you want a very cheap directional bet with lottery-like upside
  • ✓ As a replacement for a plain call when you have a precise target

Profit and Loss of the Bull Butterfly

Before looking at the chart, here is a plain-English summary of what you can make and what you can lose.

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Maximum Profit

Wing width minus debit. Realised if stock closes exactly at the body (center) strike.

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Maximum Loss

The tiny net debit paid.

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Breakeven Point

Lower: lower strike + debit. Upper: upper strike − debit.

Bull Butterfly Payoff Diagram

The chart below shows how profit/loss changes with the underlying price at expiry. Green zone = profit, red zone = loss.

Bull Butterfly Payoff Diagram illustrating profit and loss zones over underlying price0Low priceHigh priceProfitLoss
Illustrative payoff at expiry — not to scale

Bull Butterfly Example Trade

HDFCBANK at ₹1,600, your target is ₹1,700 Expiry: 21 days
ActionTypeStrikePremium
BuyCall₹1,650-₹60
SellCall₹1,700+₹28 × 2 = +₹56
BuyCall₹1,750-₹8
Net Credit/Debit -₹12 (incredibly cheap!)
Max Profit ₹38 — if HDFCBANK closes at ₹1,700
Max Loss ₹12
Breakevens: ₹1,662₹1,738
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HDFCBANK rallied to ₹1,695. Spread worth ₹33. Paid ₹12. Profit: ₹21 = 175% return on a ₹12 investment.

Pros & Cons of the Bull Butterfly

✓ Advantages
  • Incredibly cheap entry — often under ₹20
  • Huge percentage returns if target is hit
  • Fully defined, tiny risk
  • Great for conviction calls with a target price
✗ Disadvantages
  • Very narrow profit zone — needs precise accuracy
  • If the stock doesn't reach your target, you lose
  • Requires timing and target-price skill
  • Three legs, three fees

Bull Butterfly Frequently Asked Questions

Test Yourself

Quick Quiz

Answer all questions and check your score.

1 How does a Bull Butterfly differ from a standard Long Butterfly?

2 Bull Butterfly profits when:

3 Entry cost of a Bull Butterfly compared to a plain Long Call is:

4 Risk on a Bull Butterfly is:

5 Bull Butterfly is best used when: