How are ALSN 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 ALSN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.60%), the computed maximum profit is $544.66 per contract and the computed maximum loss is -$412.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ALSN butterfly?

The breakeven for the ALSN butterfly priced on this page is roughly $120.88 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 ALSN market-implied 1-standard-deviation expected move is approximately 9.63%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ALSN implied volatility affect this butterfly?

ALSN ATM IV is at 33.60% with IV rank near 34.84%, 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.

ALSN Butterfly Strategy

ALSN (Allison Transmission Holdings, Inc.), in the Consumer Cyclical sector, (Auto - Parts industry), listed on NYSE.

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium-and heavy-duty commercial vehicles, and medium-and heavy-tactical U.S. defense vehicles worldwide. It offers transmissions for various applications, including distribution, refuse, construction, fire, and emergency on-highway trucks; school and transit buses; motor homes; energy, mining, and construction off-highway vehicles and equipment; and wheeled and tracked defense vehicles. The company markets its transmissions under the Allison Transmission brand name; and remanufactured transmissions under the ReTran brand name. It also sells branded replacement parts, support equipment, aluminum die cast components, and other products necessary to service the installed base of vehicles utilizing its transmissions, as well as defense kits, engineering services, and extended transmission coverage services to various original equipment manufacturers, distributors, and the U.S. government. The company serves customers through an independent network of approximately 1,400 independent distributor and dealer locations. The company was formerly known as Clutch Holdings, Inc.

ALSN (Allison Transmission Holdings, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Parts, with a market capitalization of approximately $10.16B, a trailing P/E of 18.96, a beta of 1.01 versus the broader market, a 52-week range of 76.01-137.62, average daily share volume of 888K, a public-listing history dating back to 2012, approximately 4K full-time employees. These structural characteristics shape how ALSN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.01 places ALSN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ALSN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on ALSN?

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 ALSN snapshot

As of May 15, 2026, spot at $117.19, ATM IV 33.60%, IV rank 34.84%, expected move 9.63%. The butterfly on ALSN 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 ALSN specifically: ALSN IV at 33.60% 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 9.63% (roughly $11.29 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 ALSN expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALSN should anchor to the underlying notional of $117.19 per share and to the trader's directional view on ALSN stock.

ALSN butterfly setup

The ALSN 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 ALSN near $117.19, the first option leg uses a $110.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALSN 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 ALSN shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$110.00	$10.10
Sell 2	Call	$115.00	$6.65
Buy 1	Call	$125.00	$2.33

ALSN butterfly risk and reward

Net Premium / Debit: +$87.50
Max Profit (per contract): $544.66
Max Loss (per contract): -$412.50
Breakeven(s): $120.88
Risk / Reward Ratio: 1.320

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.

ALSN butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on ALSN. 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%	+$87.50
$25.92	-77.9%	+$87.50
$51.83	-55.8%	+$87.50
$77.74	-33.7%	+$87.50
$103.65	-11.6%	+$87.50
$129.56	+10.6%	-$412.50
$155.47	+32.7%	-$412.50
$181.38	+54.8%	-$412.50
$207.29	+76.9%	-$412.50
$233.20	+99.0%	-$412.50

When traders use butterfly on ALSN

Butterflies on ALSN are pinning bets - traders use them when they expect ALSN 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.

ALSN thesis for this butterfly

The market-implied 1-standard-deviation range for ALSN extends from approximately $105.90 on the downside to $128.48 on the upside. A ALSN long call butterfly is a pinning play: it pays maximum at the middle strike if ALSN settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALSN IV rank near 34.84% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on ALSN should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, ALSN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALSN-specific events.

ALSN 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. ALSN positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALSN alongside the broader basket even when ALSN-specific fundamentals are unchanged. Always rebuild the position from current ALSN chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on ALSN?: A butterfly on ALSN is the butterfly strategy applied to ALSN (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 ALSN stock trading near $117.19, the strikes shown on this page are snapped to the nearest listed ALSN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ALSN 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 ALSN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.60%), the computed maximum profit is $544.66 per contract and the computed maximum loss is -$412.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ALSN butterfly?: The breakeven for the ALSN butterfly priced on this page is roughly $120.88 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 ALSN market-implied 1-standard-deviation expected move is approximately 9.63%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on ALSN?: Butterflies on ALSN are pinning bets - traders use them when they expect ALSN 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 ALSN implied volatility affect this butterfly?: ALSN ATM IV is at 33.60% with IV rank near 34.84%, 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.