FMAG Butterfly Strategy
FMAG (Fidelity Magellan ETF), in the Financial Services sector, (Asset Management industry), listed on CBOE.
The fund selectively targets top-tier businesses, encompassing both those that experience robust growth aligned with economic cycles and those exhibiting consistent, stable expansion, aiming to leverage profound, long-lasting societal and economic shifts.
FMAG (Fidelity Magellan ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $258.5M, a beta of 1.10 versus the broader market, a 52-week range of 30.49-37.19, average daily share volume of 21K, a public-listing history dating back to 2021. These structural characteristics shape how FMAG etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.10 places FMAG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FMAG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on FMAG?
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 FMAG snapshot
As of June 30, 2026, spot at $36.75, ATM IV 35.50%, expected move 10.18%. The butterfly on FMAG 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 17-day expiry.
Why this butterfly structure on FMAG specifically: IV rank is unavailable in the current snapshot, so regime-based timing for FMAG is inferred from ATM IV at 35.50% alone, with a market-implied 1-standard-deviation move of approximately 10.18% (roughly $3.74 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FMAG expiries trade a higher absolute premium for lower per-day decay. Position sizing on FMAG should anchor to the underlying notional of $36.75 per share and to the trader's directional view on FMAG etf.
FMAG butterfly setup
The FMAG 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 FMAG near $36.75, the first option leg uses a $35.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FMAG chain at a 17-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 FMAG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $35.00 | $2.23 |
| Sell 2 | Call | $37.00 | $1.04 |
| Buy 1 | Call | $39.00 | $0.30 |
FMAG butterfly risk and reward
- Net Premium / Debit
- -$45.00
- Max Profit (per contract)
- $148.96
- Max Loss (per contract)
- -$45.00
- Breakeven(s)
- $35.45, $38.55
- Risk / Reward Ratio
- 3.310
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.
FMAG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on FMAG. 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% | -$45.00 |
| $8.13 | -77.9% | -$45.00 |
| $16.26 | -55.8% | -$45.00 |
| $24.38 | -33.7% | -$45.00 |
| $32.51 | -11.5% | -$45.00 |
| $40.63 | +10.6% | -$45.00 |
| $48.76 | +32.7% | -$45.00 |
| $56.88 | +54.8% | -$45.00 |
| $65.01 | +76.9% | -$45.00 |
| $73.13 | +99.0% | -$45.00 |
When traders use butterfly on FMAG
Butterflies on FMAG are pinning bets - traders use them when they expect FMAG 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.
FMAG thesis for this butterfly
The market-implied 1-standard-deviation range for FMAG extends from approximately $33.01 on the downside to $40.49 on the upside. A FMAG long call butterfly is a pinning play: it pays maximum at the middle strike if FMAG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. As a Financial Services name, FMAG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FMAG-specific events.
FMAG 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. FMAG positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FMAG alongside the broader basket even when FMAG-specific fundamentals are unchanged. Always rebuild the position from current FMAG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on FMAG?
- A butterfly on FMAG is the butterfly strategy applied to FMAG (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 FMAG etf trading near $36.75, the strikes shown on this page are snapped to the nearest listed FMAG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FMAG 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 FMAG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 35.50%), the computed maximum profit is $148.96 per contract and the computed maximum loss is -$45.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FMAG butterfly?
- The breakeven for the FMAG butterfly priced on this page is roughly $35.45 and $38.55 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 FMAG market-implied 1-standard-deviation expected move is approximately 10.18%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on FMAG?
- Butterflies on FMAG are pinning bets - traders use them when they expect FMAG 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 FMAG implied volatility affect this butterfly?
- Current FMAG ATM IV is 35.50%; IV rank context is unavailable in the current snapshot.