FDN Butterfly Strategy
FDN (First Trust Dow Jones Internet Index Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The First Trust Dow Jones Internet Index Fund is an exchange-traded index fund. The Fund seeks investment results that correspond generally to the price and yield , before the Fund's fees and expenses, of an equity index called the Dow Jones Internet Composite IndexSM.
FDN (First Trust Dow Jones Internet Index Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $6.02B, a beta of 1.12 versus the broader market, a 52-week range of 224.47-287.81, average daily share volume of 671K, a public-listing history dating back to 2006. These structural characteristics shape how FDN etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.12 places FDN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on FDN?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
Current FDN snapshot
As of May 15, 2026, spot at $268.13, ATM IV 24.90%, IV rank 48.41%, expected move 7.14%. The butterfly on FDN below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this butterfly structure on FDN specifically: FDN IV at 24.90% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 7.14% (roughly $19.14 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FDN expiries trade a higher absolute premium for lower per-day decay. Position sizing on FDN should anchor to the underlying notional of $268.13 per share and to the trader's directional view on FDN etf.
FDN butterfly setup
The FDN butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With FDN near $268.13, the first option leg uses a $255.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FDN chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 FDN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $255.00 | $17.65 |
| Sell 2 | Call | $270.00 | $7.60 |
| Buy 1 | Call | $280.00 | $3.45 |
FDN butterfly risk and reward
- Net Premium / Debit
- -$590.00
- Max Profit (per contract)
- $858.24
- Max Loss (per contract)
- -$590.00
- Breakeven(s)
- $260.90, $279.26
- Risk / Reward Ratio
- 1.455
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
FDN butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on FDN. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$590.00 |
| $59.29 | -77.9% | -$590.00 |
| $118.58 | -55.8% | -$590.00 |
| $177.86 | -33.7% | -$590.00 |
| $237.15 | -11.6% | -$590.00 |
| $296.43 | +10.6% | -$90.00 |
| $355.71 | +32.7% | -$90.00 |
| $415.00 | +54.8% | -$90.00 |
| $474.28 | +76.9% | -$90.00 |
| $533.57 | +99.0% | -$90.00 |
When traders use butterfly on FDN
Butterflies on FDN are pinning bets - traders use them when they expect FDN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
FDN thesis for this butterfly
The market-implied 1-standard-deviation range for FDN extends from approximately $248.99 on the downside to $287.27 on the upside. A FDN long call butterfly is a pinning play: it pays maximum at the middle strike if FDN settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current FDN IV rank near 48.41% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on FDN should anchor more to the directional view and the expected-move geometry. As a Financial Services name, FDN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FDN-specific events.
FDN butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. FDN positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FDN alongside the broader basket even when FDN-specific fundamentals are unchanged. Always rebuild the position from current FDN chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on FDN?
- A butterfly on FDN is the butterfly strategy applied to FDN (etf). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With FDN etf trading near $268.13, the strikes shown on this page are snapped to the nearest listed FDN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FDN butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the FDN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 24.90%), the computed maximum profit is $858.24 per contract and the computed maximum loss is -$590.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FDN butterfly?
- The breakeven for the FDN butterfly priced on this page is roughly $260.90 and $279.26 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current FDN market-implied 1-standard-deviation expected move is approximately 7.14%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on FDN?
- Butterflies on FDN are pinning bets - traders use them when they expect FDN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current FDN implied volatility affect this butterfly?
- FDN ATM IV is at 24.90% with IV rank near 48.41%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.