Broken Wing Put Butterfly
Also known as: BWB Put, Unbalanced Put Butterfly
Neutral to slightly bearish — want to collect a small credit with no risk to the upside and a defined (but asymmetric) risk below the lower wing
Risk Profile at a Glance
How to Construct the Broken Wing Put Butterfly
- 1.Buy 1 put at strike C
- 2.Sell 2 puts at strike B
- 3.Buy 1 put at strike A (A is wider below B than B is below C)
- 4.Net credit in most cases
Understanding the Broken Wing Put Butterfly
The broken wing put butterfly is the put version of the BWB — the lower wing is wider than the upper wing, which allows the position to collect a net credit and eliminates any loss above the highest strike. The maximum profit occurs if the stock pins near the middle strike at expiration. The wider lower wing means a sharp decline can produce losses, making this trade suitable for neutral to slightly bearish outlooks where the trader wants income with defined downside risk. The BWB put is a popular income strategy in high-IV environments when stocks are expected to drift sideways or decline slightly.
Unlike a standard put butterfly which requires a debit, the BWB put collects premium, making it more capital-efficient. In the EdgeOS context, BWB put trades work best during bear count 4–7 when the stock is in the middle of a bearish sequence and likely to oscillate before the next leg. The critical adjustment rule: if the stock breaks sharply below the lower long put, close the position to avoid the asymmetric wing loss..
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
Compare with Similar Strategies
Other Advanced Structures Strategies
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Frequently Asked Questions
What is the Broken Wing Put Butterfly options strategy?
The broken wing put butterfly is the put version of the BWB — the lower wing is wider than the upper wing, which allows the position to collect a net credit and eliminates any loss above the highest strike. The maximum profit occurs if the stock pins near the middle strike at expiration.
When should I use the Broken Wing Put Butterfly?
Neutral to slightly bearish — want to collect a small credit with no risk to the upside and a defined (but asymmetric) risk below the lower wing
What is the maximum loss on the Broken Wing Put 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 Put Butterfly compare to similar strategies?
The Broken Wing Put Butterfly is a neutral credit strategy. Compared to the Long Put Butterfly (neutral, debit), the Broken Wing Put 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.