strategy comparison
Skip Strike Butterfly vs Broken Wing Butterfly
In practice these are the same structure described two ways: a butterfly whose wing is widened by skipping the adjacent strike.
Side by side
Same eight dimensions for both structures — outlook, risk, Greeks, capital, complexity, and the IV environment each one wants.
| Dimension | Skip Strike Butterfly | Broken Wing Butterfly |
|---|---|---|
| Outlook | neutral / bullish / bearish | neutral / bullish / bearish |
| Max profit | Width of narrow side - debit paid | Width of narrow wing + credit received |
| Max loss | Debit paid (narrow side) or debit + extra width (wide side) | Width of wide wing - credit received |
| Breakevens | Varies with strike placement | Middle strike +/- adjusted for credit |
| Greeks exposure | Positive theta from the double short body; defined gamma risk across the skipped wing. | Butterfly-style pin risk with a directional tilt; positive theta when entered for a credit. |
| Capital / margin | Credit or small debit; max loss defined by the wing widths. | Credit entry: risk is the wider wing minus the credit; no naked margin. |
| Complexity | expert | expert |
| Best IV environment | Mid-to-high IV for the better credit entry. | Mid-to-high IV improves the credit; less IV-sensitive than a condor. |
Payoff at a glance
Illustrative P/L at expiration for both structures at a $100 underlying. Exact strikes and premiums are on each strategy's guide.
The verdict
When to choose which
In practice these are the same structure described two ways: a butterfly whose wing is widened by skipping the adjacent strike. Choose the label your broker or community uses — what matters is the mechanics: the skip (or break) creates the wider wing, the credit potential, and the directional tilt. The only real distinction is that "skip strike" specifically means widening by exactly one listed strike.
Frequently asked questions
Are they actually different strategies?
No — both are butterflies with unequal wings. "Skip strike" just names the most common way of breaking the wing: leaving out the next available strike instead of choosing an arbitrary width.
When does the naming matter?
When scanning or placing the trade: a skip-strike structure assumes the strike ladder has an adjacent strike to skip. On wide-listed underlyings the terms blur entirely.
What is the main risk of the structure?
The wide-wing side. Loss there is defined but larger than on the narrow side — size the position to that worst case, not to the credit.