Iron Butterfly is a limited risk, non-directional options strategy that is similar to a butterfly but created using a combination of PUT and CALL option contracts unlike a Butterfly which is created of all Call or all Put option contracts.

For a Iron butterfly, the trader enters into a Stradle at the middle strike price. To create the wings, the trader buts or sells a strangle at lower and higher strike price from the middle strike price. The Iron Butterfly provides limited profit and loss opportunity.