Why Asymmetrical Butterfly Spreads Outperform Traditional Strategies for Directional Trading

When you’re trading options, structure matters. A lot of traders stick with symmetrical butterfly spreads because they’re textbook-standard—equal distances between strikes, balanced risk on both sides. But here’s the thing: if you have a directional bias, that symmetry works against you. That’s where the broken wing butterfly comes in, and it’s a game-changer for anyone with a specific market outlook.

The core idea is simple—break the symmetry intentionally. By widening strikes on one side and narrowing them on the other, you can layer in directional edge while still keeping your maximum risk defined. We’ll walk through exactly how this works, why it costs more upfront, and how it pays off when the market moves your way or surprises you.

The Fundamental Difference: Symmetry vs. Skew

A traditional butterfly maintains a 1:2:1 ratio with evenly-spaced strikes. If you’re using $5 increments, both the long and short spreads are $5 wide. It’s neat, it’s balanced, and it’s neutral.

A broken butterfly spread throws that balance out on purpose. You keep the 1:2:1 ratio—that’s what locks in your maximum risk—but you change the width of each wing. One side stays wide; the other gets narrow. The result? Your position tilts directionally.

Here’s a concrete example. Say you’re bearish on a stock trading at $152.50 with an expected move of $8. With a standard butterfly, you might set $150-$145-$140 strikes. But with a broken wing butterfly, you’d flip the structure to $150-$145-$143. The upper spread is still $5 wide, but the lower wing is only $2 wide. That asymmetry is the entire point.

How This Shifts Your Payoff Diagram

The difference shows up most clearly when the stock moves past your lowest strike.

In a regular butterfly spread, if the stock breaks below your furthest strike, the entire position typically expires worthless. You get zero. That’s the downside to perfect symmetry—if you’re wrong on direction and the move is bigger than expected, you lose everything.

With a broken wing butterfly, that changes. Because the long spread is wider than the short spread, your position retains value even if the stock overshoots your target. Let’s use QCOM as the example.

You buy the $150/$145 put spread (5 points wide) and sell the $145/$143 put spread (2 points wide). You pay around $1 to $1.05 for this setup, compared to roughly $0.70 for a standard butterfly.

Now walk through expiration scenarios:

• Above $150: Everything expires worthless. Loss is your full premium paid.
• At $147: The long spread is worth $3. The short spread is worthless. Net value: $3.
• At $145: Sweet spot. Long spread is $5, short spread is zero. Maximum profit: $5.
• At $144: Long spread is $5, short spread is $1. Net value: $4.
• At $143: Long spread is $7, short spread is $4. But the position maxes out at $3 (this is your floor).
• Below $143: Your position never drops below $3, no matter how far the stock falls.

Compare that to a standard butterfly where everything below $140 is worthless. The broken wing butterfly gives you a safety net. You’re paying a 40-50% premium upfront for that cushion, and if the stock makes a bigger move than expected, you keep some profit instead of watching it evaporate.

Understanding Delta and Directional Tilt

When you adjust the strike widths, you’re changing the delta profile of your position. Delta measures how much the option price moves relative to the stock price.

By making one wing wider and the other narrower, you increase the delta in the direction of your bias. If you’re bearish and construct your long spread on the upper side (wide) and short spread on the lower side (narrow), you’re adding more short delta to the trade. This means your position benefits more when the stock drops toward your short strike.

It’s not magic—it’s mechanics. The wider spread contains more directional sensitivity, so it dominate the position’s overall greek profile. You end up with a trade that profits more if you’re right about direction, and loses less if you’re slightly wrong.

QCOM Case Study: Putting It Into Practice

Let’s say QCOM is at $152.50 in early April, heading into mid-month expiration. Options premiums suggest an $8 expected move. You’re bearish, targeting $144.50 by April 14th expiration. Since there’s no $144.50 strike, you round to $145.

A standard butterfly would be $150/$145/$140. But you want more directional leverage. So instead, you set up $150/$145/$143.

The numbers break down like this:

• Long put spread: $150/$145 (5 points wide)
• Short put spread: $145/$143 (2 points wide)
• Cost: ~$1.00 to $1.05
• Max risk: $2.00 ($2 width of short spread = your maximum loss if stock goes above $150)
• Max profit: $5.00 (achieved anywhere at or above $145, then slightly declining past $143 but holding above $3)

The setup is asking: “I think QCOM is heading down toward $145. But even if it doesn’t and keeps falling, I want to stay in the game.” That’s exactly what the broken wing butterfly delivers.

Broken Wing vs. Symmetrical: The Comparison

The trade-off is clear: you pay 40-50% more to own the trade, but you get downside protection and stronger directional exposure. For traders with conviction on direction, that’s usually worth it.

The Payoff Profile in Action

Think about what happens in three different scenarios with your QCOM broken wing butterfly:

Scenario 1 – You’re Wrong on Direction (Stock Rallies) QCOM shoots to $160. All your puts expire worthless. You lose your $1 premium. That hurts, but it’s a known, defined risk from the start. No surprises.

Scenario 2 – You’re Partially Right (Stock Hits Target) QCOM settles at $145 exactly. Both spreads are exercised. Your long spread nets $5, your short spread nets $0. Minus the $1 you paid, you pocket $4 profit. That’s an 80% return on the $5 maximum risk.

Scenario 3 – You’re Very Right (Stock Overshoots) QCOM craters to $138. Your long spread is worth $5 (it’s fully ITM), your short spread is worth $2 (both options are ITM). Your position nets $3. Minus the $1 cost, you profit $2. In a standard butterfly, you’d be sitting at zero. The broken wing kept you whole.

Why This Matters for Your Trading

The broken wing butterfly isn’t just a variation on an old strategy—it’s a framework for thinking about risk and reward differently. It says: “I have an opinion. I want to get paid if I’m right. But I also want insurance if I’m very right and the stock moves bigger than I expected.”

That insurance costs money upfront. But when volatility explodes or earnings surprise to the downside or the market structure shifts, you’re grateful for it. You’re in profit instead of watching a blown-up spread hit zero.

The key is honest directional conviction. If you set up a broken wing butterfly bearish on QCOM and the stock actually rallies, you take your full loss on the defined risk. But if your bearish thesis plays out and the stock moves down—especially if it moves down hard—the broken wing structure lets you capitalize on that bigger move in a way symmetrical butterflies can’t.

For traders tired of perfectly balanced spreads that punish you for being right by too much, the broken wing butterfly spreads offer a practical alternative that aligns payoff with conviction.