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I recently walked through a trade structure that completely changes how you think about portfolio defense — the broken wing butterfly.
And let me just say, don’t let the name scare you off! It’s not difficult at all — more on this below. Now…
Most traders avoid adding protection because it cuts into their initial credit. But here’s what makes this structure so compelling: When you build it correctly, it brings in additional credit while creating a profit zone that defends your position.
That means you can keep your usual morning credit play intact and still layer on a strategic hedge that strengthens your overall position.
Let me break down exactly how this works because once you understand the components, you’ll see why this is one of the smartest defensive plays you can make.
Breaking the Butterfly Into Its Parts
A broken wing butterfly looks complicated at first glance — that 1-2-1 structure can seem intimidating. But when you separate the pieces, it’s actually just two spreads working together.
The structure itself is simple: Buy one lower strike, sell two at the middle strike, then buy one farther out at a higher strike. Think of it as buying the $15, selling the $25 twice, and buying the $40 — a clean 1-2-1 setup.
That middle strike becomes the natural pin area for the trade.
The first component is a bull call debit spread. Let’s use SPX for our example…
If I buy the 7,015 call and sell the 7,025 call, that’s a 10-wide debit spread. Since this spread is out of the money (OTM), it’s cheap — and that low cost is exactly what we want.
The second component is where the credit comes from. When I sell the 7,025 call and buy the 7,040, that creates a 15-wide bear call credit spread. That overlap at the 7,025 strike ties the whole thing together and forms the butterfly profile.
When you combine these two spreads — the 10-wide debit paired with the 15-wide credit — the result is a broken wing butterfly that can be structured for a credit instead of a debit.
The Defense That Costs You Nothing
Here’s the critical insight that makes this structure powerful: When you enter this as a pending order for credit, it doesn’t reduce the initial credit from our main Daily Profit Play.Â
If you’re pulling in $1.25 in the morning, this defensive layer doesn’t take anything away from that. That alone makes it one of the cleanest defensive tools available.
The key is placing this as a limit order for credit — don’t accept the default debit your platform may show. I typically target around a $1.00 credit. If it doesn’t fill, no harm done. You still keep the entire credit from your core trade.
But if it does fill and price drifts into your structure, you’ve created a protective trap around the afternoon session, giving you the chance to profit if the market settles down and drifts by noon.
It’s a smooth way to manage risk while setting yourself up for extra upside if the market cooperates.
The maximum risk stays relatively small if the move doesn’t materialize, but the wide break-even zone and credit collection make the trade efficient and forgiving. That’s the power of understanding how these components work together.
I’ll see you in the markets.
Chris Pulver
Chris Pulver TradingÂ
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
P.S. 1 Daily Trade Delivered 362 winners in 2025…
JUST by aligning every single trade with the market’s expected range for the day!
And in the first 22 trades this year, this same approach has delivered 18 winners.
Want to see how to get in on the next opportunity?
We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. Stated results are from live published alerts between 8/26/24 and 1/22/25. The win rate has been 89.3% on the options with an average return of 14.62% over a one-day hold time.
