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The classic, original butterfly shape: a defined-risk bet that the underlying finishes near a specific price, with a small, known maximum loss on either side and a larger peak profit right at the middle strike.

A Long Put Butterfly buys one put at a high strike, sells two puts at a middle strike, and buys one put at a low strike — all at the same expiry. It's built entirely from puts, and it's the exact opposite trade of a Short Put Butterfly on the same three strikes: buy where that strategy sells, sell where it buys.

The two long "wings" cap the loss on either side. The two short puts at the middle strike are what generate the peak profit — they're worth the least, and therefore cheapest to close out or let expire, exactly when the underlying sits right at that strike.

This is the shape most people picture when they hear "butterfly" — a peak in the middle, tapering to a small loss on both sides:

1. Well above the high strike, or well below the low strike — flat, maximum loss. All legs resolve in a way that nets out to the debit paid.
2. Approaching the middle strike from either side — losses shrink as the underlying nears the middle, crossing into profit at each breakeven.
3. Exactly at the middle strike — maximum profit, the single best outcome for the position.

A Long Put Butterfly fits a high-conviction, range-bound view centered on a specific price — you believe the underlying will settle very close to a particular level, and want a cheap, defined-risk way to express that precisely, rather than a wider bet like an Iron Condor. It's often used when the cost is low relative to the potential payoff, since the maximum loss is limited to a small net debit paid upfront.

Suppose Nifty is trading at 24,000 with a weekly expiry coming up, and lot size is 65. You have high conviction it settles very close to 24,000.

1. Confirm the setup. You expect Nifty to finish very close to 24,000.
2. Buy 1 put at the 24,300 strike for a premium of 320.
3. Sell 2 puts at the 24,000 strike, collecting a premium of 140 each — 280 total.
4. Buy 1 put at the 23,700 strike for a premium of 58.
5. Calculate the net debit: (320 + 58) − 280 = 98 points, or ₹6,370 at this lot size — your maximum possible loss.
6. Understand the loss zones: at or beyond either wing (24,300 or 23,700), you lose the full ₹6,370.
7. Understand the peak: exactly at 24,000, maximum profit of ₹13,130.
8. See how it resolves at expiry:
   • Nifty finishes at 23,000 or 25,000 (well away from 24,000) → flat loss of ₹6,370.
   • Nifty finishes exactly at 24,000 → maximum profit of ₹13,130.
   • Nifty finishes right at either breakeven → you exactly break even.

Quick reference for the same trade:

Based on the worked example above. Compare this to the Short Put Butterfly page's diagram, built on the same three strikes — they're mirror images across the horizontal axis. Move the cursor over the chart to see profit/loss at any price.

• The profitable zone is narrow. Because the peak is a single point rather than a plateau, the underlying needs to finish genuinely close to the middle strike for this to pay off well — a wider miss lands in the flat loss zone.
• Three separate legs, one at 2x size, mean higher execution cost than a simple two-leg spread.
• Index options on NSE are typically European-style and cash-settled — no early-assignment risk on the short legs.