Test a Reverse Iron Butterfly across possible paths

Market outlook Large move either way

Long spreads centered on strike seek movement from body. Use the lab to see how the position responds before committing to a single forecast.

Scenario Lab

See how the position changes

Move the underlying, clock, and implied volatility independently. Values before expiration use a Black–Scholes estimate; expiration values use intrinsic payoff.

Buy put 1Strike Leg DTE Leg IV %Premium

Sell put 2Strike Leg DTE Leg IV %Premium

Buy call 3Strike Leg DTE Leg IV %Premium

Sell call 4Strike Leg DTE Leg IV %Premium

The catalog’s default strikes and premiums are illustrative. No ticker lookup or market data is used.

Selected scenario—

Estimated P/L before expiration by underlying move and time remaining
Underlying	Today	30 days	14 days	7 days	Expiration
-15% —	—	—	—	—	—
-10% —	—	—	—	—	—
-5% —	—	—	—	—	—
0% —	—	—	—	—	—
+5% —	—	—	—	—	—
+10% —	—	—	—	—	—
+20% —	—	—	—	—	—

IV lens

At expiration

Intrinsic payoff checkpoints

Time value has gone to zero. IV no longer changes the result.

Profit or loss at expiration
Underlying	Move	P/L
—	-15%	—
—	-10%	—
—	-5%	—
—	0%	—
—	+5%	—
—	+10%	—
—	+20%	—

Model boundary: theoretical estimates use dividend-adjusted Black–Scholes for European exercise or a 100-step binomial estimate for American exercise. Fees, spreads, discrete dividend dates, early assignment behavior, and liquidity effects are excluded. Calculation, not advice.

Why this structure behaves this way

Reverse Iron Butterfly is shaped by neutral delta and long vega exposure

Delta-neutral at entry, structurally similar to the reverse iron condor but centered on a single body strike. Long gamma and vega reward movement away from the body; theta decays daily while the stock sits still.

This page uses the catalog’s illustrative default legs so you can compare direction, time, and volatility effects in one place. Edit the assumptions above to test a different starting point.