WEED Butterfly Strategy
WEED (Roundhill Investments - Cannabis ETF), in the Financial Services sector, (Asset Management industry), listed on CBOE.
Roundhill believes that continued legalization by both U.S. states and foreign governments globally result in an attractive growth profile for the cannabis sector. The Roundhill Cannabis ETF ("WEED") offers concentrated exposure to the largest U.S. cannabis companies.
WEED (Roundhill Investments - Cannabis ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $7.1M, a beta of 1.06 versus the broader market, a 52-week range of 8.961-31.047, average daily share volume of 23K, a public-listing history dating back to 2022. These structural characteristics shape how WEED etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.06 places WEED roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on WEED?
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 WEED snapshot
As of May 15, 2026, spot at $19.41, ATM IV 87.30%, IV rank 17.23%, expected move 25.03%. The butterfly on WEED 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 WEED specifically: WEED IV at 87.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a WEED butterfly, with a market-implied 1-standard-deviation move of approximately 25.03% (roughly $4.86 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 WEED expiries trade a higher absolute premium for lower per-day decay. Position sizing on WEED should anchor to the underlying notional of $19.41 per share and to the trader's directional view on WEED etf.
WEED butterfly setup
The WEED 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 WEED near $19.41, the first option leg uses a $18.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WEED 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 WEED shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $18.00 | $2.93 |
| Sell 2 | Call | $19.00 | $2.33 |
| Buy 1 | Call | $20.00 | $1.88 |
WEED butterfly risk and reward
- Net Premium / Debit
- -$15.00
- Max Profit (per contract)
- $77.74
- Max Loss (per contract)
- -$15.00
- Breakeven(s)
- $18.15, $19.85
- Risk / Reward Ratio
- 5.183
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.
WEED butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WEED. 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% | -$15.00 |
| $4.30 | -77.8% | -$15.00 |
| $8.59 | -55.7% | -$15.00 |
| $12.88 | -33.6% | -$15.00 |
| $17.17 | -11.5% | -$15.00 |
| $21.46 | +10.6% | -$15.00 |
| $25.75 | +32.7% | -$15.00 |
| $30.04 | +54.8% | -$15.00 |
| $34.33 | +76.9% | -$15.00 |
| $38.62 | +99.0% | -$15.00 |
When traders use butterfly on WEED
Butterflies on WEED are pinning bets - traders use them when they expect WEED 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.
WEED thesis for this butterfly
The market-implied 1-standard-deviation range for WEED extends from approximately $14.55 on the downside to $24.27 on the upside. A WEED long call butterfly is a pinning play: it pays maximum at the middle strike if WEED settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WEED IV rank near 17.23% 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 WEED at 87.30%. As a Financial Services name, WEED options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WEED-specific events.
WEED 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. WEED positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WEED alongside the broader basket even when WEED-specific fundamentals are unchanged. Always rebuild the position from current WEED chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WEED?
- A butterfly on WEED is the butterfly strategy applied to WEED (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 WEED etf trading near $19.41, the strikes shown on this page are snapped to the nearest listed WEED chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WEED 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 WEED butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 87.30%), the computed maximum profit is $77.74 per contract and the computed maximum loss is -$15.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WEED butterfly?
- The breakeven for the WEED butterfly priced on this page is roughly $18.15 and $19.85 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 WEED market-implied 1-standard-deviation expected move is approximately 25.03%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WEED?
- Butterflies on WEED are pinning bets - traders use them when they expect WEED 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 WEED implied volatility affect this butterfly?
- WEED ATM IV is at 87.30% with IV rank near 17.23%, 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.