ALK Butterfly Strategy
ALK (Alaska Air Group, Inc.), in the Industrials sector, (Airlines, Airports & Air Services industry), listed on NYSE.
Alaska Air Group, Inc., through its subsidiaries, provides passenger and cargo air transportation services. The company operates through three segments: Mainline, Regional, and Horizon. It flies to approximately 120 destinations throughout North America. Alaska Air Group, Inc. was founded in 1932 and is based in Seattle, Washington.
ALK (Alaska Air Group, Inc.) trades in the Industrials sector, specifically Airlines, Airports & Air Services, with a market capitalization of approximately $4.30B, a trailing P/E of 60.37, a beta of 1.25 versus the broader market, a 52-week range of 33.03-65.88, average daily share volume of 4.5M, a public-listing history dating back to 1980, approximately 30K full-time employees. These structural characteristics shape how ALK stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.25 places ALK roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 60.37 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple.
What is a butterfly on ALK?
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 ALK snapshot
As of May 15, 2026, spot at $37.01, ATM IV 61.50%, IV rank 51.45%, expected move 17.63%. The butterfly on ALK 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 ALK specifically: ALK IV at 61.50% 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 17.63% (roughly $6.53 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 ALK expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALK should anchor to the underlying notional of $37.01 per share and to the trader's directional view on ALK stock.
ALK butterfly setup
The ALK 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 ALK near $37.01, the first option leg uses a $35.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALK 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 ALK shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $35.00 | $4.05 |
| Sell 2 | Call | $37.50 | $2.73 |
| Buy 1 | Call | $40.00 | $1.70 |
ALK butterfly risk and reward
- Net Premium / Debit
- -$30.00
- Max Profit (per contract)
- $212.71
- Max Loss (per contract)
- -$30.00
- Breakeven(s)
- $35.30, $39.70
- Risk / Reward Ratio
- 7.090
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.
ALK butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ALK. 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% | -$30.00 |
| $8.19 | -77.9% | -$30.00 |
| $16.37 | -55.8% | -$30.00 |
| $24.56 | -33.7% | -$30.00 |
| $32.74 | -11.5% | -$30.00 |
| $40.92 | +10.6% | -$30.00 |
| $49.10 | +32.7% | -$30.00 |
| $57.28 | +54.8% | -$30.00 |
| $65.47 | +76.9% | -$30.00 |
| $73.65 | +99.0% | -$30.00 |
When traders use butterfly on ALK
Butterflies on ALK are pinning bets - traders use them when they expect ALK 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.
ALK thesis for this butterfly
The market-implied 1-standard-deviation range for ALK extends from approximately $30.48 on the downside to $43.54 on the upside. A ALK long call butterfly is a pinning play: it pays maximum at the middle strike if ALK settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALK IV rank near 51.45% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on ALK should anchor more to the directional view and the expected-move geometry. As a Industrials name, ALK options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALK-specific events.
ALK 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. ALK positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALK alongside the broader basket even when ALK-specific fundamentals are unchanged. Always rebuild the position from current ALK chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ALK?
- A butterfly on ALK is the butterfly strategy applied to ALK (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 ALK stock trading near $37.01, the strikes shown on this page are snapped to the nearest listed ALK chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALK 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 ALK butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 61.50%), the computed maximum profit is $212.71 per contract and the computed maximum loss is -$30.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALK butterfly?
- The breakeven for the ALK butterfly priced on this page is roughly $35.30 and $39.70 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 ALK market-implied 1-standard-deviation expected move is approximately 17.63%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ALK?
- Butterflies on ALK are pinning bets - traders use them when they expect ALK 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 ALK implied volatility affect this butterfly?
- ALK ATM IV is at 61.50% with IV rank near 51.45%, 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.