USL Butterfly Strategy
USL (United States 12 Month Oil Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The United States 12 Month Oil Fund, LP (USL) is an exchange-traded security that is designed to track the daily price movements of West Texas Intermediate ("WTI") light, sweet crude oil. USL issues shares that may be purchased and sold on the NYSE Arca.
USL (United States 12 Month Oil Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $49.2M, a beta of 1.38 versus the broader market, a 52-week range of 32.25-55.62, average daily share volume of 56K, a public-listing history dating back to 2007. These structural characteristics shape how USL etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.38 indicates USL has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a butterfly on USL?
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 USL snapshot
As of May 15, 2026, spot at $55.30, ATM IV 50.10%, IV rank 35.09%, expected move 14.36%. The butterfly on USL 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 USL specifically: USL IV at 50.10% 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 14.36% (roughly $7.94 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 USL expiries trade a higher absolute premium for lower per-day decay. Position sizing on USL should anchor to the underlying notional of $55.30 per share and to the trader's directional view on USL etf.
USL butterfly setup
The USL 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 USL near $55.30, the first option leg uses a $53.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed USL 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 USL shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $53.00 | $4.35 |
| Sell 2 | Call | $55.00 | $3.43 |
| Buy 1 | Call | $58.00 | $2.20 |
USL butterfly risk and reward
- Net Premium / Debit
- +$30.00
- Max Profit (per contract)
- $227.29
- Max Loss (per contract)
- -$70.00
- Breakeven(s)
- $57.30
- Risk / Reward Ratio
- 3.247
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.
USL butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on USL. 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% | +$30.00 |
| $12.24 | -77.9% | +$30.00 |
| $24.46 | -55.8% | +$30.00 |
| $36.69 | -33.7% | +$30.00 |
| $48.91 | -11.5% | +$30.00 |
| $61.14 | +10.6% | -$70.00 |
| $73.37 | +32.7% | -$70.00 |
| $85.59 | +54.8% | -$70.00 |
| $97.82 | +76.9% | -$70.00 |
| $110.04 | +99.0% | -$70.00 |
When traders use butterfly on USL
Butterflies on USL are pinning bets - traders use them when they expect USL 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.
USL thesis for this butterfly
The market-implied 1-standard-deviation range for USL extends from approximately $47.36 on the downside to $63.24 on the upside. A USL long call butterfly is a pinning play: it pays maximum at the middle strike if USL settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current USL IV rank near 35.09% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on USL should anchor more to the directional view and the expected-move geometry. As a Financial Services name, USL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to USL-specific events.
USL 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. USL positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move USL alongside the broader basket even when USL-specific fundamentals are unchanged. Always rebuild the position from current USL chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on USL?
- A butterfly on USL is the butterfly strategy applied to USL (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 USL etf trading near $55.30, the strikes shown on this page are snapped to the nearest listed USL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are USL 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 USL butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 50.10%), the computed maximum profit is $227.29 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 USL butterfly?
- The breakeven for the USL butterfly priced on this page is roughly $57.30 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 USL market-implied 1-standard-deviation expected move is approximately 14.36%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on USL?
- Butterflies on USL are pinning bets - traders use them when they expect USL 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 USL implied volatility affect this butterfly?
- USL ATM IV is at 50.10% with IV rank near 35.09%, 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.