Iron Butterfly

neutral Capped loss

Advanced: a higher-credit, tighter cousin of the iron condor.

When to use it

Sell an ATM call and put, buy protective wings. Collects a large credit but needs the stock to pin near the strike. Defined risk.

Max profit

The net credit, if price pins the body at expiry.

Max loss

Wing width minus the credit.

Payoff at expiry

illustrative shape — not to scale

■ profit zone ■ loss zone X axis = stock price at expiry →

How it's built

Strikes shown low→high. Sell = collect premium · Buy = pay premium for protection or upside.

Hermes-evaluated setups

Best backtested per-ticker setups for this strategy. None currently clear our 80% conviction floor (common for directional / long-volatility structures, which win less often but pay more when they hit) — shown for completeness over ≥20 trades. Win rate is confidence-adjusted (95% lower bound); Avg P/L is per one-contract position.

Ticker	Win Rate	Avg P/L / contract	Sharpe	Trades	DTE	Regime
LOW	59%	+$177.00	1.4	30	30	BEAR
LITE	74%	+$176.00	2.6	30	30	SIDEWAYS
DG	52%	+$167.00	1.3	30	30	SIDEWAYS
MRVL	74%	+$152.00	1.9	30	30	BEAR
BABA	66%	+$140.00	1.3	30	30	BULL
NKE	66%	+$126.00	1.0	30	30	SIDEWAYS
CBOE	72%	+$124.00	1.6	42	21	BULL
TSM	69%	+$124.00	1.1	42	21	SIDEWAYS

Backtested results are not a guarantee of future performance.