XMAG Butterfly Strategy
XMAG (Large Cap Ex-Mag 7 ETF), in the Financial Services sector, (Asset Management industry), listed on NASDAQ.
The Defiance Large Cap ex-Magnificent Seven ETF (the “Fund”) seeks to track the performance, before fees and expenses, of the BITA US 500 ex-Magnificent 7 Index (the “Index”).
XMAG (Large Cap Ex-Mag 7 ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $47.6M, a beta of 0.82 versus the broader market, a 52-week range of 19.893-24.44, average daily share volume of 52K, a public-listing history dating back to 2024. These structural characteristics shape how XMAG etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.82 places XMAG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. XMAG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on XMAG?
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 XMAG snapshot
As of May 15, 2026, spot at $24.65, ATM IV 36.20%, IV rank 3.80%, expected move 10.38%. The butterfly on XMAG 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 XMAG specifically: XMAG IV at 36.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a XMAG butterfly, with a market-implied 1-standard-deviation move of approximately 10.38% (roughly $2.56 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 XMAG expiries trade a higher absolute premium for lower per-day decay. Position sizing on XMAG should anchor to the underlying notional of $24.65 per share and to the trader's directional view on XMAG etf.
XMAG butterfly setup
The XMAG 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 XMAG near $24.65, the first option leg uses a $23.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed XMAG 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 XMAG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $23.00 | $1.43 |
| Sell 2 | Call | $25.00 | $0.80 |
| Buy 1 | Call | $26.00 | $0.34 |
XMAG butterfly risk and reward
- Net Premium / Debit
- -$16.50
- Max Profit (per contract)
- $180.85
- Max Loss (per contract)
- -$16.50
- Breakeven(s)
- $23.17
- Risk / Reward Ratio
- 10.960
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.
XMAG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on XMAG. 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% | -$16.50 |
| $5.46 | -77.9% | -$16.50 |
| $10.91 | -55.7% | -$16.50 |
| $16.36 | -33.6% | -$16.50 |
| $21.81 | -11.5% | -$16.50 |
| $27.26 | +10.6% | +$83.50 |
| $32.70 | +32.7% | +$83.50 |
| $38.15 | +54.8% | +$83.50 |
| $43.60 | +76.9% | +$83.50 |
| $49.05 | +99.0% | +$83.50 |
When traders use butterfly on XMAG
Butterflies on XMAG are pinning bets - traders use them when they expect XMAG 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.
XMAG thesis for this butterfly
The market-implied 1-standard-deviation range for XMAG extends from approximately $22.09 on the downside to $27.21 on the upside. A XMAG long call butterfly is a pinning play: it pays maximum at the middle strike if XMAG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current XMAG IV rank near 3.80% 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 XMAG at 36.20%. As a Financial Services name, XMAG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to XMAG-specific events.
XMAG 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. XMAG positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move XMAG alongside the broader basket even when XMAG-specific fundamentals are unchanged. Always rebuild the position from current XMAG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on XMAG?
- A butterfly on XMAG is the butterfly strategy applied to XMAG (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 XMAG etf trading near $24.65, the strikes shown on this page are snapped to the nearest listed XMAG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are XMAG 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 XMAG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 36.20%), the computed maximum profit is $180.85 per contract and the computed maximum loss is -$16.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a XMAG butterfly?
- The breakeven for the XMAG butterfly priced on this page is roughly $23.17 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 XMAG market-implied 1-standard-deviation expected move is approximately 10.38%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on XMAG?
- Butterflies on XMAG are pinning bets - traders use them when they expect XMAG 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 XMAG implied volatility affect this butterfly?
- XMAG ATM IV is at 36.20% with IV rank near 3.80%, 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.