WEBS Butterfly Strategy
WEBS (Direxion Daily Dow Jones Internet Bear 3X ETF), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
This fund is designed to deliver daily investment returns mirroring three times the inverse (opposite) performance of the Dow Jones Internet Composite Index, calculated before any fees and expenses. However, there is no assurance that the fund will successfully achieve its specified daily investment goal.
WEBS (Direxion Daily Dow Jones Internet Bear 3X ETF) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $9.4M, a beta of -3.45 versus the broader market, a 52-week range of 13.635-33.25, average daily share volume of 81K, a public-listing history dating back to 2019. These structural characteristics shape how WEBS etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of -3.45 indicates WEBS has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. WEBS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on WEBS?
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.
WEBS snapshot
As of August 14, 2026, spot at $14.18, ATM IV 21.90%, IV rank 2.53%, expected move 6.28%. The butterfly on WEBS below is built from the August 14, 2026 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 WEBS specifically: WEBS IV at 21.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a WEBS butterfly, with a market-implied 1-standard-deviation move of approximately 6.28% (roughly $0.89 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 WEBS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WEBS should anchor to the underlying notional of $14.18 per share and to the trader's directional view on WEBS etf.
WEBS butterfly setup
The WEBS butterfly below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With WEBS at $14.18 on that close, the first option leg uses a $13.47 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WEBS 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 WEBS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $13.47 | N/A |
| Sell 2 | Call | $14.18 | N/A |
| Buy 1 | Call | $14.89 | N/A |
WEBS 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.
WEBS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WEBS. 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 WEBS
Butterflies on WEBS are pinning bets - traders use them when they expect WEBS 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.
WEBS thesis for this butterfly
The market-implied 1-standard-deviation range for WEBS extends from approximately $13.29 on the downside to $15.07 on the upside. A WEBS long call butterfly is a pinning play: it pays maximum at the middle strike if WEBS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WEBS IV rank near 2.53% 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 WEBS at 21.90%. As a Financial Services name, WEBS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WEBS-specific events.
WEBS 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. WEBS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WEBS alongside the broader basket even when WEBS-specific fundamentals are unchanged. Always rebuild the position from current WEBS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WEBS?
- A butterfly on WEBS is the butterfly strategy applied to WEBS (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 WEBS etf at $14.18 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed WEBS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are WEBS 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 WEBS butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 21.90%), 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 WEBS butterfly?
- The breakeven for the WEBS butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The WEBS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 6.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WEBS?
- Butterflies on WEBS are pinning bets - traders use them when they expect WEBS 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 WEBS implied volatility affect this butterfly?
- WEBS ATM IV is at 21.90% with IV rank near 2.53%, 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.