FUMB Butterfly Strategy
FUMB (First Trust Ultra Short Duration Municipal ETF), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
First Trust Ultra Short Duration Municipal ETF seeks to provide federally tax-exempt income consistent with capital preservation. Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets (including investment borrowings) in municipal debt securities that pay interest that is exempt from regular federal income taxes.
FUMB (First Trust Ultra Short Duration Municipal ETF) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $228.4M, a beta of 0.07 versus the broader market, a 52-week range of 20.02-20.72, average daily share volume of 89K, a public-listing history dating back to 2018. These structural characteristics shape how FUMB etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.07 indicates FUMB has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. FUMB pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on FUMB?
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 FUMB snapshot
As of May 14, 2026, spot at $20.05, ATM IV 33.90%, IV rank 18.59%, expected move 9.72%. The butterfly on FUMB 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 35-day expiry.
Why this butterfly structure on FUMB specifically: FUMB IV at 33.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a FUMB butterfly, with a market-implied 1-standard-deviation move of approximately 9.72% (roughly $1.95 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FUMB expiries trade a higher absolute premium for lower per-day decay. Position sizing on FUMB should anchor to the underlying notional of $20.05 per share and to the trader's directional view on FUMB etf.
FUMB butterfly setup
The FUMB 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 FUMB near $20.05, the first option leg uses a $19.05 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FUMB chain at a 35-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 FUMB shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $19.05 | N/A |
| Sell 2 | Call | $20.05 | N/A |
| Buy 1 | Call | $21.05 | N/A |
FUMB butterfly risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
FUMB butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on FUMB. 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.
When traders use butterfly on FUMB
Butterflies on FUMB are pinning bets - traders use them when they expect FUMB 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.
FUMB thesis for this butterfly
The market-implied 1-standard-deviation range for FUMB extends from approximately $18.10 on the downside to $22.00 on the upside. A FUMB long call butterfly is a pinning play: it pays maximum at the middle strike if FUMB settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current FUMB IV rank near 18.59% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on FUMB at 33.90%. As a Financial Services name, FUMB options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FUMB-specific events.
FUMB 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. FUMB positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FUMB alongside the broader basket even when FUMB-specific fundamentals are unchanged. Always rebuild the position from current FUMB chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on FUMB?
- A butterfly on FUMB is the butterfly strategy applied to FUMB (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 FUMB etf trading near $20.05, the strikes shown on this page are snapped to the nearest listed FUMB chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FUMB 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 FUMB butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.90%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FUMB butterfly?
- The breakeven for the FUMB butterfly priced on this page is no defined breakeven on the modeled curve 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 FUMB market-implied 1-standard-deviation expected move is approximately 9.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on FUMB?
- Butterflies on FUMB are pinning bets - traders use them when they expect FUMB 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 FUMB implied volatility affect this butterfly?
- FUMB ATM IV is at 33.90% with IV rank near 18.59%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.