AIG Butterfly Strategy
AIG (American International Group, Inc.), in the Financial Services sector, (Insurance - Diversified industry), listed on NYSE.
American International Group, Inc. offers insurance products for commercial, institutional, and individual customers in North America and internationally. The company's General Insurance segment provides general liability, environmental, commercial automobile liability, workers' compensation, casualty, and crisis management insurance products; commercial, industrial, and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, crop, and marine insurance. It also provides professional liability insurance products for a range of businesses and risks, including directors and officers, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. In addition, this segment offers personal auto and property insurance, such as auto, homeowners, umbrella, yacht, fine art, and collections; voluntary and sponsor-paid personal accident; supplemental health products; extended warranty insurance products; and travel insurance products. Its Life and Retirement segment offers variable annuities, index and fixed annuities, and retail mutual funds; and financial planning and advisory services; record-keeping, plan administrative, and compliance services; and term life and universal life insurance. It also provides stable value wrap products, and structured settlement and pension risk transfer annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts.
AIG (American International Group, Inc.) trades in the Financial Services sector, specifically Insurance - Diversified, with a market capitalization of approximately $40.18B, a trailing P/E of 12.90, a beta of 0.54 versus the broader market, a 52-week range of 71.25-87.46, average daily share volume of 5.1M, a public-listing history dating back to 1973, approximately 22K full-time employees. These structural characteristics shape how AIG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.54 indicates AIG has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. AIG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on AIG?
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 AIG snapshot
As of May 15, 2026, spot at $76.13, ATM IV 23.01%, IV rank 32.08%, expected move 6.60%. The butterfly on AIG 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 28-day expiry.
Why this butterfly structure on AIG specifically: AIG IV at 23.01% 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 6.60% (roughly $5.02 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 AIG expiries trade a higher absolute premium for lower per-day decay. Position sizing on AIG should anchor to the underlying notional of $76.13 per share and to the trader's directional view on AIG stock.
AIG butterfly setup
The AIG 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 AIG near $76.13, the first option leg uses a $72.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AIG 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 AIG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $72.00 | $4.93 |
| Sell 2 | Call | $76.00 | $2.15 |
| Buy 1 | Call | $80.00 | $0.58 |
AIG butterfly risk and reward
- Net Premium / Debit
- -$120.00
- Max Profit (per contract)
- $255.25
- Max Loss (per contract)
- -$120.00
- Breakeven(s)
- $73.20, $78.80
- Risk / Reward Ratio
- 2.127
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.
AIG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on AIG. 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% | -$120.00 |
| $16.84 | -77.9% | -$120.00 |
| $33.67 | -55.8% | -$120.00 |
| $50.50 | -33.7% | -$120.00 |
| $67.34 | -11.6% | -$120.00 |
| $84.17 | +10.6% | -$120.00 |
| $101.00 | +32.7% | -$120.00 |
| $117.83 | +54.8% | -$120.00 |
| $134.66 | +76.9% | -$120.00 |
| $151.49 | +99.0% | -$120.00 |
When traders use butterfly on AIG
Butterflies on AIG are pinning bets - traders use them when they expect AIG 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.
AIG thesis for this butterfly
The market-implied 1-standard-deviation range for AIG extends from approximately $71.11 on the downside to $81.15 on the upside. A AIG long call butterfly is a pinning play: it pays maximum at the middle strike if AIG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current AIG IV rank near 32.08% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on AIG should anchor more to the directional view and the expected-move geometry. As a Financial Services name, AIG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AIG-specific events.
AIG 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. AIG positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AIG alongside the broader basket even when AIG-specific fundamentals are unchanged. Always rebuild the position from current AIG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on AIG?
- A butterfly on AIG is the butterfly strategy applied to AIG (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 AIG stock trading near $76.13, the strikes shown on this page are snapped to the nearest listed AIG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are AIG 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 AIG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 23.01%), the computed maximum profit is $255.25 per contract and the computed maximum loss is -$120.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AIG butterfly?
- The breakeven for the AIG butterfly priced on this page is roughly $73.20 and $78.80 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 AIG market-implied 1-standard-deviation expected move is approximately 6.60%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on AIG?
- Butterflies on AIG are pinning bets - traders use them when they expect AIG 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 AIG implied volatility affect this butterfly?
- AIG ATM IV is at 23.01% with IV rank near 32.08%, 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.