HIPS Butterfly Strategy
HIPS (GraniteShares HIPS US High Income ETF), in the Financial Services sector, (Asset Management - Income industry), listed on AMEX.
The GraniteShares HIPS US High Income ETF seeks to track the performance, before fees and expenses, of the EQM High Income Pass-Through Securities Index*.
HIPS (GraniteShares HIPS US High Income ETF) trades in the Financial Services sector, specifically Asset Management - Income, with a market capitalization of approximately $105.0M, a beta of 0.66 versus the broader market, a 52-week range of 11.39-12.46, average daily share volume of 45K, a public-listing history dating back to 2015. These structural characteristics shape how HIPS etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.66 indicates HIPS has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HIPS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on HIPS?
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 HIPS snapshot
As of May 15, 2026, spot at $11.75, ATM IV 318.80%, IV rank 65.02%, expected move 14.98%. The butterfly on HIPS 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 HIPS specifically: HIPS IV at 318.80% 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 14.98% (roughly $1.76 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 HIPS expiries trade a higher absolute premium for lower per-day decay. Position sizing on HIPS should anchor to the underlying notional of $11.75 per share and to the trader's directional view on HIPS etf.
HIPS butterfly setup
The HIPS 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 HIPS near $11.75, the first option leg uses a $11.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HIPS 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 HIPS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $11.00 | $0.88 |
| Sell 2 | Call | $12.00 | $0.40 |
| Buy 1 | Call | $12.00 | $0.40 |
HIPS butterfly risk and reward
- Net Premium / Debit
- -$47.50
- Max Profit (per contract)
- $52.50
- Max Loss (per contract)
- -$47.50
- Breakeven(s)
- $11.48
- Risk / Reward Ratio
- 1.105
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.
HIPS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on HIPS. 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 | -99.9% | -$47.50 |
| $2.61 | -77.8% | -$47.50 |
| $5.20 | -55.7% | -$47.50 |
| $7.80 | -33.6% | -$47.50 |
| $10.40 | -11.5% | -$47.50 |
| $12.99 | +10.6% | +$52.50 |
| $15.59 | +32.7% | +$52.50 |
| $18.19 | +54.8% | +$52.50 |
| $20.79 | +76.9% | +$52.50 |
| $23.38 | +99.0% | +$52.50 |
When traders use butterfly on HIPS
Butterflies on HIPS are pinning bets - traders use them when they expect HIPS 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.
HIPS thesis for this butterfly
The market-implied 1-standard-deviation range for HIPS extends from approximately $9.99 on the downside to $13.51 on the upside. A HIPS long call butterfly is a pinning play: it pays maximum at the middle strike if HIPS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current HIPS IV rank near 65.02% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on HIPS should anchor more to the directional view and the expected-move geometry. As a Financial Services name, HIPS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HIPS-specific events.
HIPS 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. HIPS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HIPS alongside the broader basket even when HIPS-specific fundamentals are unchanged. Always rebuild the position from current HIPS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on HIPS?
- A butterfly on HIPS is the butterfly strategy applied to HIPS (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 HIPS etf trading near $11.75, the strikes shown on this page are snapped to the nearest listed HIPS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HIPS 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 HIPS butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 318.80%), the computed maximum profit is $52.50 per contract and the computed maximum loss is -$47.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HIPS butterfly?
- The breakeven for the HIPS butterfly priced on this page is roughly $11.48 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 HIPS market-implied 1-standard-deviation expected move is approximately 14.98%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on HIPS?
- Butterflies on HIPS are pinning bets - traders use them when they expect HIPS 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 HIPS implied volatility affect this butterfly?
- HIPS ATM IV is at 318.80% with IV rank near 65.02%, 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.