← Back to Options Strategy Guide

A three-strike, all-call strategy that bets on a big move in either direction — the same basic idea as a Short Put Butterfly, built with calls instead of puts.

A Short Call Butterfly sells one call at a low strike, buys two calls at a middle strike, and sells one call at a high strike — all at the same expiry. Like its put-based counterpart, this is the inverse of a standard butterfly: it profits when the underlying moves well away from the middle strike, in either direction, and only loses if the underlying finishes close to it.

This is functionally identical to a Short Put Butterfly, built with calls instead — the same "sell-buy2-sell" pattern, the same dip in the payoff at the middle strike, the same flat profit at the edges. Whether calls or puts are used doesn't change the underlying strategy, just the mechanics of executing it.

The payoff shape mirrors a Short Put Butterfly's exactly:

1. Well above the high strike, or well below the low strike — flat, maximum profit.
2. Approaching the middle strike from either side — profit shrinks, crossing into a loss at each breakeven.
3. Exactly at the middle strike — maximum loss, the single worst outcome for the position.

A Short Call Butterfly fits the same view as a Short Put Butterfly — the underlying making a significant move, direction uncertain — and the choice between the two often comes down to which side's option chain offers better liquidity or pricing at the strikes you want, rather than a difference in the underlying thesis.

Suppose Nifty is trading at 24,000 with a weekly expiry coming up, and lot size is 65. You expect a significant move but aren't sure which direction.

1. Confirm the setup. You expect Nifty to move away from 24,000 significantly, direction uncertain.
2. Sell 1 call at the 23,700 strike, collecting a premium of 325.
3. Buy 2 calls at the 24,000 strike, paying a premium of 145 each — 290 total.
4. Sell 1 call at the 24,300 strike, collecting a premium of 60.
5. Calculate the net credit: (325 + 60) − 290 = 95 points, or ₹6,175 at this lot size.
6. Understand the profit zones: at or beyond either wing (23,700 or 24,300), you keep the full ₹6,175 credit.
7. Understand the danger zone: the position loses money between roughly 23,795 and 24,204, with the worst outcome — a loss of ₹13,325 — occurring exactly at 24,000.
8. See how it resolves at expiry:
   • Nifty finishes at 23,000 or 25,000 (well away from 24,000) → flat profit of ₹6,175.
   • Nifty finishes exactly at 24,000 → maximum loss of ₹13,325.
   • Nifty finishes right at either breakeven → you exactly break even.

Quick reference for the same trade:

Based on the worked example above. Nearly identical in shape to the Short Put Butterfly page's diagram — the strategy is the same regardless of which option type is used to build it. Move the cursor over the chart to see profit/loss at any price.

• The worst outcome is exactly the scenario many traders expect by default — the underlying staying roughly where it is.
• 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.
• This is not a beginner strategy — the inverted payoff shape is easy to confuse with an ordinary butterfly if you're not reading it carefully.