IHI Butterfly Strategy
IHI (iShares U.S. Medical Devices ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The iShares U.S. Medical Devices ETF seeks to track the investment results of an index composed of U.S. equities in the medical devices sector.
IHI (iShares U.S. Medical Devices ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $3.18B, a beta of 0.94 versus the broader market, a 52-week range of 47.37-64.71, average daily share volume of 2.3M, a public-listing history dating back to 2006. These structural characteristics shape how IHI etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.94 places IHI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. IHI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on IHI?
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 IHI snapshot
As of May 15, 2026, spot at $48.53, ATM IV 24.10%, IV rank 77.68%, expected move 6.91%. The butterfly on IHI 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 IHI specifically: IHI IV at 24.10% is rich versus its 1-year range, which makes a premium-buying IHI butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 6.91% (roughly $3.35 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 IHI expiries trade a higher absolute premium for lower per-day decay. Position sizing on IHI should anchor to the underlying notional of $48.53 per share and to the trader's directional view on IHI etf.
IHI butterfly setup
The IHI 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 IHI near $48.53, the first option leg uses a $46.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed IHI 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 IHI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $46.00 | $3.15 |
| Sell 2 | Call | $49.00 | $1.23 |
| Buy 1 | Call | $51.00 | $0.43 |
IHI butterfly risk and reward
- Net Premium / Debit
- -$112.50
- Max Profit (per contract)
- $165.38
- Max Loss (per contract)
- -$112.50
- Breakeven(s)
- $47.13, $50.99
- Risk / Reward Ratio
- 1.470
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.
IHI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on IHI. 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% | -$112.50 |
| $10.74 | -77.9% | -$112.50 |
| $21.47 | -55.8% | -$112.50 |
| $32.20 | -33.7% | -$112.50 |
| $42.93 | -11.5% | -$112.50 |
| $53.66 | +10.6% | -$12.50 |
| $64.38 | +32.7% | -$12.50 |
| $75.11 | +54.8% | -$12.50 |
| $85.84 | +76.9% | -$12.50 |
| $96.57 | +99.0% | -$12.50 |
When traders use butterfly on IHI
Butterflies on IHI are pinning bets - traders use them when they expect IHI 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.
IHI thesis for this butterfly
The market-implied 1-standard-deviation range for IHI extends from approximately $45.18 on the downside to $51.88 on the upside. A IHI long call butterfly is a pinning play: it pays maximum at the middle strike if IHI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current IHI IV rank near 77.68% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on IHI at 24.10%. As a Financial Services name, IHI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to IHI-specific events.
IHI 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. IHI positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move IHI alongside the broader basket even when IHI-specific fundamentals are unchanged. Always rebuild the position from current IHI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on IHI?
- A butterfly on IHI is the butterfly strategy applied to IHI (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 IHI etf trading near $48.53, the strikes shown on this page are snapped to the nearest listed IHI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are IHI 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 IHI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 24.10%), the computed maximum profit is $165.38 per contract and the computed maximum loss is -$112.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a IHI butterfly?
- The breakeven for the IHI butterfly priced on this page is roughly $47.13 and $50.99 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 IHI market-implied 1-standard-deviation expected move is approximately 6.91%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on IHI?
- Butterflies on IHI are pinning bets - traders use them when they expect IHI 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 IHI implied volatility affect this butterfly?
- IHI ATM IV is at 24.10% with IV rank near 77.68%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.