ALG Butterfly Strategy
ALG (Alamo Group Inc.), in the Industrials sector, (Agricultural - Machinery industry), listed on NYSE.
Alamo Group Inc. is a global enterprise specializing in the design, production, distribution, and servicing of equipment crucial for managing vegetation and maintaining public and private infrastructure. It serves a broad international clientele spanning governmental agencies, industrial operations, and agricultural businesses. The company operates through two main divisions: Vegetation Management Division: This segment provides a comprehensive range of machinery and associated components for controlling plant growth and preparing land. Offerings include robust, hydraulically-powered and tractor-mounted mowers, various types of cutters for intensive use, specialized agricultural implements such as rotary tillers, posthole diggers, and scraper blades, as well as zero-turn mowers, snow blowers, and rock removal equipment. It also supplies a wide array of replacement parts, from cutting blades to fertilizer application components and hydraulic boom-mounted hedge and grass cutters. Industrial Equipment Division: This division focuses on apparatus for public works and utility maintenance.
ALG (Alamo Group Inc.) trades in the Industrials sector, specifically Agricultural - Machinery, with a market capitalization of approximately $2.05B, a trailing P/E of 20.10, a beta of 1.11 versus the broader market, a 52-week range of 145.76-233.29, average daily share volume of 186K, a public-listing history dating back to 1993, approximately 4K full-time employees. These structural characteristics shape how ALG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.11 places ALG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ALG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on ALG?
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 ALG snapshot
As of June 30, 2026, spot at $165.24, ATM IV 30.90%, IV rank 6.51%, expected move 8.86%. The butterfly on ALG 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 17-day expiry.
Why this butterfly structure on ALG specifically: ALG IV at 30.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a ALG butterfly, with a market-implied 1-standard-deviation move of approximately 8.86% (roughly $14.64 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ALG expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALG should anchor to the underlying notional of $165.24 per share and to the trader's directional view on ALG stock.
ALG butterfly setup
The ALG 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 ALG near $165.24, the first option leg uses a $155.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALG chain at a 17-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 ALG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $155.00 | $11.65 |
| Sell 2 | Call | $165.00 | $4.20 |
| Buy 1 | Call | $175.00 | $0.85 |
ALG butterfly risk and reward
- Net Premium / Debit
- -$410.00
- Max Profit (per contract)
- $531.47
- Max Loss (per contract)
- -$410.00
- Breakeven(s)
- $159.10, $170.90
- Risk / Reward Ratio
- 1.296
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.
ALG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ALG. 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% | -$410.00 |
| $36.54 | -77.9% | -$410.00 |
| $73.08 | -55.8% | -$410.00 |
| $109.61 | -33.7% | -$410.00 |
| $146.15 | -11.6% | -$410.00 |
| $182.68 | +10.6% | -$410.00 |
| $219.22 | +32.7% | -$410.00 |
| $255.75 | +54.8% | -$410.00 |
| $292.28 | +76.9% | -$410.00 |
| $328.82 | +99.0% | -$410.00 |
When traders use butterfly on ALG
Butterflies on ALG are pinning bets - traders use them when they expect ALG 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.
ALG thesis for this butterfly
The market-implied 1-standard-deviation range for ALG extends from approximately $150.60 on the downside to $179.88 on the upside. A ALG long call butterfly is a pinning play: it pays maximum at the middle strike if ALG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALG IV rank near 6.51% 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 ALG at 30.90%. As a Industrials name, ALG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALG-specific events.
ALG 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. ALG positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALG alongside the broader basket even when ALG-specific fundamentals are unchanged. Always rebuild the position from current ALG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ALG?
- A butterfly on ALG is the butterfly strategy applied to ALG (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 ALG stock trading near $165.24, the strikes shown on this page are snapped to the nearest listed ALG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALG 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 ALG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 30.90%), the computed maximum profit is $531.47 per contract and the computed maximum loss is -$410.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALG butterfly?
- The breakeven for the ALG butterfly priced on this page is roughly $159.10 and $170.90 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 ALG market-implied 1-standard-deviation expected move is approximately 8.86%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ALG?
- Butterflies on ALG are pinning bets - traders use them when they expect ALG 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 ALG implied volatility affect this butterfly?
- ALG ATM IV is at 30.90% with IV rank near 6.51%, 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.