AIR Butterfly Strategy
AIR (AAR Corp.), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.
AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Aviation Services segment offers aftermarket support and services; inventory management and distribution services; and maintenance, repair, and overhaul, as well as engineering services. This segment also sells and leases new, overhauled, and repaired engine and airframe parts, and components; and provides inventory and repair programs, warranty claim management, and outsourcing programs for engine and airframe parts and components, as well as performance-based supply chain logistics programs in support of the U.S. department of defense and foreign governments. In addition, it offers airframe inspection, maintenance, repair and overhaul, painting, line maintenance, airframe modification, structural repair, avionic and installation, exterior and interior refurbishment, and engineering and support services; and repairs and overhauls components, landing gears, wheels, and brakes. The Expeditionary Services segment provides products and services supporting the movement of equipment and personnel by the U.S. and foreign governments, and non-governmental organizations. This segment also designs, manufactures, and repairs transportation pallets, and various containers and shelters; and provides engineering, design, and system integration services for command and control systems.
AIR (AAR Corp.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $4.27B, a trailing P/E of 23.76, a beta of 1.15 versus the broader market, a 52-week range of 58.83-127.21, average daily share volume of 448K, a public-listing history dating back to 1980, approximately 6K full-time employees. These structural characteristics shape how AIR stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.15 places AIR roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on AIR?
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 AIR snapshot
As of May 15, 2026, spot at $104.99, ATM IV 47.70%, IV rank 52.01%, expected move 13.68%. The butterfly on AIR 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 AIR specifically: AIR IV at 47.70% 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 13.68% (roughly $14.36 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 AIR expiries trade a higher absolute premium for lower per-day decay. Position sizing on AIR should anchor to the underlying notional of $104.99 per share and to the trader's directional view on AIR stock.
AIR butterfly setup
The AIR 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 AIR near $104.99, the first option leg uses a $100.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AIR 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 AIR shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $100.00 | $9.30 |
| Sell 2 | Call | $105.00 | $6.45 |
| Buy 1 | Call | $110.00 | $4.30 |
AIR butterfly risk and reward
- Net Premium / Debit
- -$70.00
- Max Profit (per contract)
- $377.74
- Max Loss (per contract)
- -$70.00
- Breakeven(s)
- $100.70, $109.30
- Risk / Reward Ratio
- 5.396
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.
AIR butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on AIR. 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% | -$70.00 |
| $23.22 | -77.9% | -$70.00 |
| $46.44 | -55.8% | -$70.00 |
| $69.65 | -33.7% | -$70.00 |
| $92.86 | -11.6% | -$70.00 |
| $116.07 | +10.6% | -$70.00 |
| $139.29 | +32.7% | -$70.00 |
| $162.50 | +54.8% | -$70.00 |
| $185.71 | +76.9% | -$70.00 |
| $208.92 | +99.0% | -$70.00 |
When traders use butterfly on AIR
Butterflies on AIR are pinning bets - traders use them when they expect AIR 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.
AIR thesis for this butterfly
The market-implied 1-standard-deviation range for AIR extends from approximately $90.63 on the downside to $119.35 on the upside. A AIR long call butterfly is a pinning play: it pays maximum at the middle strike if AIR settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current AIR IV rank near 52.01% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on AIR should anchor more to the directional view and the expected-move geometry. As a Industrials name, AIR options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AIR-specific events.
AIR 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. AIR positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AIR alongside the broader basket even when AIR-specific fundamentals are unchanged. Always rebuild the position from current AIR chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on AIR?
- A butterfly on AIR is the butterfly strategy applied to AIR (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 AIR stock trading near $104.99, the strikes shown on this page are snapped to the nearest listed AIR chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are AIR 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 AIR butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 47.70%), the computed maximum profit is $377.74 per contract and the computed maximum loss is -$70.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AIR butterfly?
- The breakeven for the AIR butterfly priced on this page is roughly $100.70 and $109.30 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 AIR market-implied 1-standard-deviation expected move is approximately 13.68%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on AIR?
- Butterflies on AIR are pinning bets - traders use them when they expect AIR 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 AIR implied volatility affect this butterfly?
- AIR ATM IV is at 47.70% with IV rank near 52.01%, 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.