Broken Wing Call Butterfly
Also known as: BWB Call, Unbalanced Call Butterfly
Neutral to slightly bullish — want to collect a small credit with no risk to the downside and a defined (but asymmetric) risk above the top wing
Risk Profile at a Glance
How to Construct the Broken Wing Call Butterfly
- 1.Buy 1 call at strike A
- 2.Sell 2 calls at strike B
- 3.Buy 1 call at strike C (C is wider above B than B is above A)
- 4.Net credit in most cases
Understanding the Broken Wing Call Butterfly
The broken wing butterfly (BWB) is a modified butterfly spread where the wings are unequal — the upper wing is wider than the lower wing. This asymmetry allows the position to collect a small net credit rather than paying a debit, eliminating any loss if the stock falls below the lowest strike. The trade-off is a larger potential loss above the highest strike versus a standard butterfly. The maximum profit zone is near the middle strike (strike B) at expiration.
The BWB is popular for income generation on stocks in a neutral range because it collects premium upfront and profits from the stock pinning near the short strikes. The wide upper wing means sharp upside moves can produce losses, so it is used by traders who are neutral to slightly bullish. In the EdgeOS framework, BWB call trades fit best during bull count 4–7 when the stock is progressing through the middle of its cycle and a pin near current price is expected. The key rule: always make sure the credit received exceeds the asymmetric wing risk if you want a truly risk-free downside..
When to Use It — EdgeOS Signal Integration
- ✓Use when no active bull or bear EdgeOS count — the stock is in chop / reset mode
- ✓Extension score near zero — stock is pinned at the ATR mid-level, no directional bias
- ✓Market breadth is neutral (SCTR breadth 45–55%) — range-bound conditions expected
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Frequently Asked Questions
What is the Broken Wing Call Butterfly options strategy?
The broken wing butterfly (BWB) is a modified butterfly spread where the wings are unequal — the upper wing is wider than the lower wing. This asymmetry allows the position to collect a small net credit rather than paying a debit, eliminating any loss if the stock falls below the lowest strike.
When should I use the Broken Wing Call Butterfly?
Neutral to slightly bullish — want to collect a small credit with no risk to the downside and a defined (but asymmetric) risk above the top wing
What is the maximum loss on the Broken Wing Call Butterfly?
The maximum loss is fully defined at entry: the net debit paid (for debit strategies) or the spread width minus the credit received (for credit spreads). You can never lose more than this amount.
How does the Broken Wing Call Butterfly compare to similar strategies?
The Broken Wing Call Butterfly is a neutral credit strategy. Compared to the Long Call Butterfly (neutral, debit), the Broken Wing Call Butterfly has limited max risk and limited max reward. Your choice depends on your directional bias, IV environment, and risk tolerance. The TraderValue strategy comparison tool lets you see the exact payoff differences side by side.