Broken Wing Butterfly Bankex: Setup, Payoff and Risk Guide

In a standard butterfly, the distance from the centre strike to each outer wing is equal, producing a symmetric payoff with defined risk on both sides. The this strategy widens one wing relative to the other, which changes the net premium (often converting a net debit into a net credit or reducing it) and shifts the risk so that one side of the trade has little or no loss potential while the other retains a defined, if larger, maximum loss.

This makes the broken wing butterfly Bankex a hybrid between a standard butterfly and a directional credit spread, useful when a trader has both a range bound view and a mild directional lean on which side of that range is less likely to be breached.

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What Is the The position?

The broken wing butterfly Bankex uses three strikes and four option legs, similar to a standard butterfly, but with unequal spacing between the centre strike and each outer wing. It is most commonly constructed using calls.

The four legs of a call this trade are:

• Buy one call at the lower strike, closer to the centre strike (narrower inner wing)
• Sell two calls at the centre strike
• Buy one call at the higher strike, further from the centre strike (wider outer wing)

Because the outer wing is wider than the inner wing, the premium collected from selling the two centre calls more than offsets the cost of the two long calls in many cases, often resulting in the broken wing butterfly Bankex being entered for a net credit rather than the net debit typical of a standard butterfly.

How Does the This options approach Work?

With Bankex at Rs 59,500, a broken wing butterfly Bankex might use 59,200 as the narrower lower strike, 59,500 as the centre strike, and 60,100 as the wider upper strike. Because the gap between the centre and upper strike is wider than the gap between the lower and centre strike, the position has little to no risk below the lower strike, while retaining defined risk above the upper strike.

Parameter	Details
Index	BSE Bankex (BSE)
Expiry	Monthly only, last Thursday of the month. Effective September 2025 (NSE and BSE index expiry swap). Weekly contracts discontinued November 2024.
Lot Size	15 units (effective from January 2026 per NSE circular, reduced from 20)
Strategy Type	Range bound with directional lean, asymmetric risk
Legs	4 (1 long lower call, 2 short centre calls, 1 long higher call, unequal wing widths)
Max Profit	Realised at the centre strike; defined and calculable
Max Loss	Defined on the wider wing side; minimal or zero on the narrower wing side
Margin	Varies dynamically. Check live margin on your broker's calculator before placing any order.

The spread: Step by Step Setup

1. Select the centre strike. With Bankex at Rs 59,500, a centre strike near the current level or at a level the trader expects the index to gravitate toward is used for the broken wing butterfly Bankex.
2. Select the narrower wing strike. A strike closer to the centre, such as 59,200, is used on the side where the trader wants minimal or no risk.
3. Select the wider wing strike. A strike further from the centre, such as 60,100, is used on the side where the trader is willing to accept defined risk for the this strategy.
4. Calculate the net credit or debit. Because the wings are unequal, the broken wing butterfly Bankex often nets a credit or a smaller debit than a standard symmetric butterfly with the same centre strike.
5. Confirm the risk is acceptable on the wider wing side. Before entry, calculate the maximum loss on the wider wing side of the the position and ensure it fits within your risk tolerance, since this is where the defined risk is concentrated.

Illustrative Payoff: Broken Wing Butterfly Bankex

Illustrative example for educational purposes only. Strikes and premiums are hypothetical and should not be interpreted as a trade recommendation.

Hypothetical setup: Buy 59,200 CE at Rs 210, sell two 59,500 CE at Rs 130 each, buy 60,100 CE at Rs 45. Net credit: Rs 5 per unit. Lot size: 15 units.

Bankex at Expiry	P&L Per Lot (approx, Rs)	Outcome
At or below 59,200	+75 (net credit retained)	Minimal to no additional loss below the narrower wing
59,500 (centre strike)	+4,575 (max profit, illustrative)	Maximum profit zone of the broken wing butterfly
At or above 60,100	Defined maximum loss (illustrative)	Wider wing side defines the maximum loss

The broken wing butterfly Bankex illustrates the asymmetry clearly: the side with the narrower wing has little to no additional risk, while the side with the wider wing carries a defined but calculable maximum loss. This differs from a standard butterfly, where both sides carry equal, symmetric risk.

Greeks for the Broken Wing Butterfly Bankex

Delta: The broken wing butterfly Bankex carries a directional delta bias reflecting the asymmetric wing structure, unlike a standard butterfly which starts closer to delta neutral.

Gamma: The broken wing butterfly Bankex has negative gamma concentrated near the centre strike as expiry approaches, similar to a standard butterfly, but the asymmetry means gamma risk differs on each side.

Theta: Theta is generally positive for the broken wing butterfly Bankex near the centre strike, since the two short centre options decay faster than the two long wing options.

Vega: The broken wing butterfly Bankex is generally short vega near the centre strike, meaning a rise in implied volatility after entry tends to work against the position if the index is trading near that strike.

When the Broken Wing Butterfly Bankex May Be Considered

The broken wing butterfly Bankex may be considered when a trader has a range bound view on the index but also a mild lean on which side is less likely to be tested; wants to reduce or eliminate the net cost of a butterfly by accepting asymmetric risk; or is comfortable with a defined but potentially larger loss on one specific side of the trade.

When NOT to Use the Broken Wing Butterfly Bankex

Consider avoiding the broken wing butterfly Bankex when you have no directional lean and would prefer the symmetric risk of a standard butterfly; when the wider wing side represents a scenario you consider genuinely possible, since the maximum loss there can be larger than in a symmetric butterfly; or when you are not comfortable with a four leg structure that requires careful strike selection.

Risk Management

The broken wing butterfly Bankex has defined risk on the wider wing side, calculated at entry. Because the position is often entered for a small credit, the worst case scenario should be explicitly calculated and accepted before entry, rather than assumed to be minimal simply because the trade started with a credit. Many traders consider closing the broken wing butterfly Bankex early if the index approaches the wider wing strike.

Transaction Costs

The broken wing butterfly Bankex involves four option legs, which can mean meaningful cumulative transaction costs relative to the often small net credit or debit involved. Brokerage, exchange transaction charges, STT, GST, SEBI charges, stamp duty, and bid ask spread impact across four legs should be weighed carefully.

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Broken Wing Butterfly vs Other Bankex Neutral Strategies

Strategy	Wing Symmetry	Risk Profile	Max Profit	Complexity
Broken Wing Butterfly	Asymmetric	Minimal on one side, defined on the other	Defined (at centre strike)	High
Standard Butterfly	Symmetric	Defined and equal on both sides	Defined (at centre strike)	Medium High
Iron Condor	Symmetric (wide plateau)	Defined on both sides	Defined (net credit)	Medium

The broken wing butterfly Bankex trades the symmetric risk of a standard butterfly for an asymmetric structure that can reduce net cost, provided the trader is comfortable with the specific risk concentrated on the wider wing side.

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Conclusion

The broken wing butterfly Bankex offers a way to combine a range bound view with a directional lean, often reducing net cost compared to a standard butterfly by accepting asymmetric risk between the two wings. Always verify current lot size (15 units from January 2026) and expiry schedule before executing any trade, and consult a SEBI registered investment advisor if you are new to multi leg options strategies.

Frequently Asked Questions

What is the broken wing butterfly Bankex?

Ans. The broken wing butterfly Bankex is a variation of the standard butterfly spread with unequal wing widths, creating an asymmetric payoff with minimal risk on one side and defined risk on the other. It often nets a credit rather than the debit typical of a standard butterfly.

How does the broken wing butterfly Bankex differ from a standard butterfly?

Ans. A standard butterfly uses equal distances between the centre strike and each outer wing, producing symmetric risk. The broken wing butterfly Bankex uses unequal distances, concentrating defined risk on one side while minimising or eliminating risk on the other.

What is the maximum loss in the broken wing butterfly Bankex?

Ans. The maximum loss is concentrated on the wider wing side and should be calculated explicitly at entry, since it can be larger in absolute terms than the maximum loss on a comparable symmetric butterfly.

Can the broken wing butterfly Bankex be entered for a net credit?

Ans. Yes, because the wider wing reduces the cost of the long option on that side relative to the premium collected from the short centre options, the broken wing butterfly Bankex can often be structured for a net credit.

What is the current lot size for Bankex options?

Ans. The Bankex lot size is 15 units effective from January 2026, reduced from 20. Always verify the current lot size on nseindia.com before placing any order.

Is the broken wing butterfly Bankex suitable for beginners?

Ans. The broken wing butterfly Bankex involves four legs and asymmetric strike selection, making it generally unsuitable for beginners. It is better suited to traders who already understand standard butterfly spreads and want to explore asymmetric risk structures.