ALEC Butterfly Strategy
ALEC (Alector, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Alector, Inc. operates as a clinical-stage biopharmaceutical company, which engages in pioneering of immuno-neurology. It develops portfolio of innate immune system programs, designed to functionally repair genetic mutations and enable the rejuvenated immune cells to counteract emerging brain pathologies. Its treatment targets immune dysfunction as a root cause of multiple pathologies that are drivers of degenerative brain disorders. The company was founded by Asa Abeliovich, Errik B. Anderson, Tillman U. Gerngross, and Arnon Rosenthal in May 2013 and is headquartered in South San Francisco, CA.
ALEC (Alector, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $238.7M, a beta of 0.58 versus the broader market, a 52-week range of 1.09-3.4, average daily share volume of 742K, a public-listing history dating back to 2019, approximately 103 full-time employees. These structural characteristics shape how ALEC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.58 indicates ALEC has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a butterfly on ALEC?
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.
ALEC snapshot
As of August 14, 2026, spot at $2.02, ATM IV 53.70%, IV rank 7.41%, expected move 15.40%. The butterfly on ALEC below is built from the end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.
Why this butterfly structure on ALEC specifically: ALEC IV at 53.70% is on the cheap side of its 1-year range, which favors premium-buying structures like a ALEC butterfly, with a market-implied 1-standard-deviation move of approximately 15.40% (roughly $0.31 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ALEC expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALEC should anchor to the underlying notional of $2.02 per share and to the trader's directional view on ALEC stock.
ALEC butterfly setup
The ALEC 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 ALEC at $2.02 on that close, the first option leg uses a $1.92 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALEC chain at a 35-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 ALEC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $1.92 | N/A |
| Sell 2 | Call | $2.02 | N/A |
| Buy 1 | Call | $2.12 | N/A |
ALEC butterfly risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
ALEC butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ALEC. 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.
When traders use butterfly on ALEC
Butterflies on ALEC are pinning bets - traders use them when they expect ALEC 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.
ALEC thesis for this butterfly
The market-implied 1-standard-deviation range for ALEC extends from approximately $1.71 on the downside to $2.33 on the upside. A ALEC long call butterfly is a pinning play: it pays maximum at the middle strike if ALEC settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALEC IV rank near 7.41% 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 ALEC at 53.70%. As a Healthcare name, ALEC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALEC-specific events.
ALEC 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. ALEC positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALEC alongside the broader basket even when ALEC-specific fundamentals are unchanged. Always rebuild the position from current ALEC chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ALEC?
- A butterfly on ALEC is the butterfly strategy applied to ALEC (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 ALEC stock at $2.02 on the most recent close, the strikes shown on this page are snapped to the nearest listed ALEC chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are ALEC 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 ALEC butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 53.70%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALEC butterfly?
- The breakeven for the ALEC butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from the 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 ALEC market-implied 1-standard-deviation expected move in the same options snapshot is approximately 15.40%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ALEC?
- Butterflies on ALEC are pinning bets - traders use them when they expect ALEC 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 ALEC implied volatility affect this butterfly?
- ALEC ATM IV is at 53.70% with IV rank near 7.41%, 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.