What Is a Butterfly Spread?

By Matthew Frankel, CFP – Updated Apr 17, 2025 at 12:12 AM

Key Points

Butterfly spreads use specific option combos to bet on stock volatility levels.
Long butterfly spreads profit if the stock price hits the middle strike at expiration.
Short butterfly spreads gain most if stock hits extremes, not the middle option price.

There are plenty of different options strategies, all of which serve different purposes. One popular strategy is known as the butterfly spread, which essentially lets traders bet on or against a stock's volatility over a certain period of time. Here's how they work.

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Person learning about stocks and call versus put options while investing. — Image source: Getty Images.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.