AI Butterfly Strategy
AI (C3.ai, Inc.), in the Technology sector, (Information Technology Services industry), listed on NYSE.
C3.ai, Inc. is a leading provider of enterprise artificial intelligence (AI) software solutions, serving a global clientele across North America, Europe, the Middle East, Africa, and the Asia Pacific region. Its core offerings include the C3 AI Application Platform, a robust environment for developing, deploying, and operating enterprise-scale AI applications. Complementing this platform are specialized tools such as C3 AI Ex Machina for preparing data for analysis, C3 AI CRM which is tailored for specific industry customer relationship management needs, and C3 AI Data Vision for insightful visualization and understanding of complex data relationships. Furthermore, C3.ai delivers a comprehensive portfolio of pre-built, industry-specific AI applications designed to tackle critical business challenges. These include solutions for optimizing inventory levels (C3 AI Inventory Optimization), mitigating supply chain disruptions (C3 AI Supply Network Risk), proactively managing customer attrition (C3 AI Customer Churn Management), streamlining production schedules (C3 AI Production Schedule Optimization), forecasting equipment failures (C3 AI Predictive Maintenance), identifying financial irregularities (C3 AI Fraud Detection), and optimizing energy consumption (C3 AI Energy Management). These integrated, turnkey AI applications cater to a wide array of market segments, including oil and gas, chemicals, utilities, manufacturing, financial services, defense, intelligence, aerospace, healthcare, and telecommunications.
AI (C3.ai, Inc.) trades in the Technology sector, specifically Information Technology Services, with a market capitalization of approximately $1.51B, a beta of 2.07 versus the broader market, a 52-week range of 7.675-20.22, average daily share volume of 5.8M, a public-listing history dating back to 2020, approximately 764 full-time employees. These structural characteristics shape how AI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.07 indicates AI has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. AI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on AI?
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.
AI snapshot
As of August 14, 2026, spot at $9.90, ATM IV 79.25%, IV rank 52.76%, expected move 22.72%. The butterfly on AI 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 28-day expiry.
Why this butterfly structure on AI specifically: AI IV at 79.25% 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 22.72% (roughly $2.25 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated AI expiries trade a higher absolute premium for lower per-day decay. Position sizing on AI should anchor to the underlying notional of $9.90 per share and to the trader's directional view on AI stock.
AI butterfly setup
The AI 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 AI at $9.90 on that close, the first option leg uses a $9.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AI chain at a 28-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 AI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $9.50 | $1.08 |
| Sell 2 | Call | $10.00 | $0.82 |
| Buy 1 | Call | $10.50 | $0.63 |
AI butterfly risk and reward
- Net Premium / Debit
- -$8.00
- Max Profit (per contract)
- $37.47
- Max Loss (per contract)
- -$8.00
- Breakeven(s)
- $9.58
- Risk / Reward Ratio
- 4.684
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.
AI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on AI. 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% | -$8.00 |
| $2.20 | -77.8% | -$8.00 |
| $4.39 | -55.7% | -$8.00 |
| $6.57 | -33.6% | -$8.00 |
| $8.76 | -11.5% | -$8.00 |
| $10.95 | +10.6% | -$8.00 |
| $13.14 | +32.7% | -$8.00 |
| $15.32 | +54.8% | -$8.00 |
| $17.51 | +76.9% | -$8.00 |
| $19.70 | +99.0% | -$8.00 |
When traders use butterfly on AI
Butterflies on AI are pinning bets - traders use them when they expect AI 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.
AI thesis for this butterfly
The market-implied 1-standard-deviation range for AI extends from approximately $7.65 on the downside to $12.15 on the upside. A AI long call butterfly is a pinning play: it pays maximum at the middle strike if AI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current AI IV rank near 52.76% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on AI should anchor more to the directional view and the expected-move geometry. As a Technology name, AI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AI-specific events.
AI 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. AI positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AI alongside the broader basket even when AI-specific fundamentals are unchanged. Always rebuild the position from current AI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on AI?
- A butterfly on AI is the butterfly strategy applied to AI (stock). 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 AI stock at $9.90 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed AI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are AI 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 AI butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 79.25%), the computed maximum profit is $37.47 per contract and the computed maximum loss is -$8.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AI butterfly?
- The breakeven for the AI butterfly priced on this page is roughly $9.58 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 AI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 22.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on AI?
- Butterflies on AI are pinning bets - traders use them when they expect AI 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 AI implied volatility affect this butterfly?
- AI ATM IV is at 79.25% with IV rank near 52.76%, 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.