> For the complete documentation index, see [llms.txt](https://guide.laevitas.ch/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.laevitas.ch/option-strategies/long-put-butterfly.md).

# Long Put Butterfly

{% hint style="info" %}
A Long Put Butterfly is a combination of buying a Put, selling 2 lower strike price Puts, and buying an even lower strike price Put, with the same width across all strikes.
{% endhint %}

**Payoff Diagram:**

![](/files/ENwtTlAYyl6sRuZYreCP)

**Direction Assumption:** Neutral if done with ATM short strikes, or Bearish if done with OTM short strikes.

**Maximum Profit:** Limited to lower Long Put strike minus Short Put strike, minus debit paid.

**Maximum Loss:** Limited to net debit paid.

**Breakeven Price:** \
• On the lower end, lowest Long Put strike plus the net debit paid.\
• On the higher end, highest Long Put strike minus the net debit paid.

**Theta:** Passage of Time -> Positive Effect\
The net effect of time decay is positive. Should the underlying stays between the short strikes at expiration, all legs will decay to zero and expire worthless.

**Volatility:** \
If Volatility decreases -> Positive Effect.\
If Volatility increases -> Negative Effect. \
\
Long Put Butterflies are Vega negative, meaning that if volatility increases, the position loses value.