# Short Iron Butterfly

> Will price really sit near the strike, or are you just selling expensive premium?

| Property | Value |
| --- | --- |
| Market phase | Range-bound, no trend, price oscillating between levels, After a volatility spike, with a return to normal expected |
| Driver | Theta - you get paid because time passes and premium decays, Vega - you get paid on a change in implied volatility |
| Direction | neutral, price pinned at the strike |
| Max profit | the credit received |
| Max loss | the spread width minus the credit received |
| Risk defined | Yes |
| Legs | +1 Put @K-W; -1 Put @K; -1 Call @K; +1 Call @K+W |
| Approval level | 3 (Defined-risk spreads) |
| Experience | Advanced |

## Formulas

```text
Break-even: K - C / K + C
Max profit: C
Max loss: W - C
```

## Legs

1. +1 Put @K-W
2. -1 Put @K
3. -1 Call @K
4. +1 Call @K+W

[Read this strategy on the web](https://www.mindtrajour.com/en/academy/strategies/short-iron-butterfly)