KSTR Butterfly Strategy
KSTR (KraneShares SSE STAR Market 50 Index ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
Under normal circumstances, the fund will invest at least 80% of its net assets (plus borrowings for investment purposes) in instruments in its underlying index or in instruments that have economic characteristics similar to those in the underlying index. The underlying index includes the stocks of the top 50 companies by free-float market capitalizations listed on the SSE Science and Technology Innovation Board (the “STAR Board”). It is non-diversified.
KSTR (KraneShares SSE STAR Market 50 Index ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $60.7M, a beta of 1.21 versus the broader market, a 52-week range of 12.97-26.135, average daily share volume of 157K, a public-listing history dating back to 2021. These structural characteristics shape how KSTR etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.21 places KSTR roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on KSTR?
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 KSTR snapshot
As of May 14, 2026, spot at $25.22, ATM IV 51.20%, IV rank 18.23%, expected move 14.68%. The butterfly on KSTR 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 63-day expiry.
Why this butterfly structure on KSTR specifically: KSTR IV at 51.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a KSTR butterfly, with a market-implied 1-standard-deviation move of approximately 14.68% (roughly $3.70 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KSTR expiries trade a higher absolute premium for lower per-day decay. Position sizing on KSTR should anchor to the underlying notional of $25.22 per share and to the trader's directional view on KSTR etf.
KSTR butterfly setup
The KSTR 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 KSTR near $25.22, the first option leg uses a $24.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KSTR chain at a 63-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 KSTR shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $24.00 | $2.33 |
| Sell 2 | Call | $25.00 | $2.23 |
| Buy 1 | Call | $26.00 | $1.43 |
KSTR butterfly risk and reward
- Net Premium / Debit
- +$70.00
- Max Profit (per contract)
- $160.17
- Max Loss (per contract)
- $70.00
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- 2.288
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.
KSTR butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on KSTR. 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% | +$70.00 |
| $5.59 | -77.9% | +$70.00 |
| $11.16 | -55.7% | +$70.00 |
| $16.74 | -33.6% | +$70.00 |
| $22.31 | -11.5% | +$70.00 |
| $27.89 | +10.6% | +$70.00 |
| $33.46 | +32.7% | +$70.00 |
| $39.04 | +54.8% | +$70.00 |
| $44.61 | +76.9% | +$70.00 |
| $50.19 | +99.0% | +$70.00 |
When traders use butterfly on KSTR
Butterflies on KSTR are pinning bets - traders use them when they expect KSTR 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.
KSTR thesis for this butterfly
The market-implied 1-standard-deviation range for KSTR extends from approximately $21.52 on the downside to $28.92 on the upside. A KSTR long call butterfly is a pinning play: it pays maximum at the middle strike if KSTR settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current KSTR IV rank near 18.23% 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 KSTR at 51.20%. As a Financial Services name, KSTR options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KSTR-specific events.
KSTR 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. KSTR positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move KSTR alongside the broader basket even when KSTR-specific fundamentals are unchanged. Always rebuild the position from current KSTR chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on KSTR?
- A butterfly on KSTR is the butterfly strategy applied to KSTR (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 KSTR etf trading near $25.22, the strikes shown on this page are snapped to the nearest listed KSTR chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are KSTR 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 KSTR butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 51.20%), the computed maximum profit is $160.17 per contract and the computed maximum loss is $70.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a KSTR butterfly?
- The breakeven for the KSTR 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 KSTR market-implied 1-standard-deviation expected move is approximately 14.68%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on KSTR?
- Butterflies on KSTR are pinning bets - traders use them when they expect KSTR 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 KSTR implied volatility affect this butterfly?
- KSTR ATM IV is at 51.20% with IV rank near 18.23%, 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.