AJG Butterfly Strategy
AJG (Arthur J. Gallagher & Co.), in the Financial Services sector, (Insurance - Brokers industry), listed on NYSE.
Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, third-party claims settlement, and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, India, and the United Kingdom. It operates through Brokerage and Risk Management segments. The Brokerage segment consists of retail and wholesale insurance brokerage operations; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverage's to underwriting enterprises. This segment also performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance; and offers brokerage and consulting services to businesses and organizations, including commercial, not-for-profit, and public entities, as well as individuals in the areas of insurance placement, risk of loss management, and management of employer sponsored benefit programs. The Risk Management segment provides contract claim settlement and administration services to enterprises and public entities; and claims management, loss control consulting, and insurance property appraisal services.
AJG (Arthur J. Gallagher & Co.) trades in the Financial Services sector, specifically Insurance - Brokers, with a market capitalization of approximately $49.33B, a trailing P/E of 30.63, a beta of 0.55 versus the broader market, a 52-week range of 190.75-351.23, average daily share volume of 2.2M, a public-listing history dating back to 1984, approximately 72K full-time employees. These structural characteristics shape how AJG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.55 indicates AJG has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. AJG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on AJG?
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 AJG snapshot
As of May 15, 2026, spot at $199.13, ATM IV 33.70%, IV rank 52.60%, expected move 9.66%. The butterfly on AJG 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 AJG specifically: AJG IV at 33.70% 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 9.66% (roughly $19.24 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 AJG expiries trade a higher absolute premium for lower per-day decay. Position sizing on AJG should anchor to the underlying notional of $199.13 per share and to the trader's directional view on AJG stock.
AJG butterfly setup
The AJG 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 AJG near $199.13, the first option leg uses a $190.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AJG 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 AJG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $190.00 | $13.35 |
| Sell 2 | Call | $200.00 | $7.65 |
| Buy 1 | Call | $210.00 | $3.60 |
AJG butterfly risk and reward
- Net Premium / Debit
- -$165.00
- Max Profit (per contract)
- $821.44
- Max Loss (per contract)
- -$165.00
- Breakeven(s)
- $191.65, $208.37
- Risk / Reward Ratio
- 4.978
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.
AJG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on AJG. 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% | -$165.00 |
| $44.04 | -77.9% | -$165.00 |
| $88.07 | -55.8% | -$165.00 |
| $132.09 | -33.7% | -$165.00 |
| $176.12 | -11.6% | -$165.00 |
| $220.15 | +10.6% | -$165.00 |
| $264.18 | +32.7% | -$165.00 |
| $308.20 | +54.8% | -$165.00 |
| $352.23 | +76.9% | -$165.00 |
| $396.26 | +99.0% | -$165.00 |
When traders use butterfly on AJG
Butterflies on AJG are pinning bets - traders use them when they expect AJG 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.
AJG thesis for this butterfly
The market-implied 1-standard-deviation range for AJG extends from approximately $179.89 on the downside to $218.37 on the upside. A AJG long call butterfly is a pinning play: it pays maximum at the middle strike if AJG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current AJG IV rank near 52.60% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on AJG should anchor more to the directional view and the expected-move geometry. As a Financial Services name, AJG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AJG-specific events.
AJG 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. AJG positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AJG alongside the broader basket even when AJG-specific fundamentals are unchanged. Always rebuild the position from current AJG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on AJG?
- A butterfly on AJG is the butterfly strategy applied to AJG (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 AJG stock trading near $199.13, the strikes shown on this page are snapped to the nearest listed AJG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are AJG 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 AJG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.70%), the computed maximum profit is $821.44 per contract and the computed maximum loss is -$165.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AJG butterfly?
- The breakeven for the AJG butterfly priced on this page is roughly $191.65 and $208.37 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 AJG market-implied 1-standard-deviation expected move is approximately 9.66%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on AJG?
- Butterflies on AJG are pinning bets - traders use them when they expect AJG 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 AJG implied volatility affect this butterfly?
- AJG ATM IV is at 33.70% with IV rank near 52.60%, 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.