ALV Butterfly Strategy
ALV (Autoliv, Inc.), in the Consumer Cyclical sector, (Auto - Parts industry), listed on NYSE.
Autoliv, Inc., through its subsidiaries, develops, manufactures, and supplies passive safety systems to the automotive industry in Europe, the Americas, China, Japan, and rest of Asia. It offers passive safety systems, including modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies, and battery cut-off switches, as well as anti-whiplash systems and pedestrian protection systems, and connected safety services and solutions for riders of powered two wheelers. The company primarily serves car manufacturers. Autoliv, Inc. was founded in 1953 and is headquartered in Stockholm, Sweden.
ALV (Autoliv, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Parts, with a market capitalization of approximately $9.09B, a trailing P/E of 12.79, a beta of 1.32 versus the broader market, a 52-week range of 98.45-130.14, average daily share volume of 818K, a public-listing history dating back to 1997, approximately 59K full-time employees. These structural characteristics shape how ALV stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.32 indicates ALV has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. ALV pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on ALV?
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 ALV snapshot
As of May 15, 2026, spot at $114.92, ATM IV 28.80%, IV rank 9.36%, expected move 8.26%. The butterfly on ALV 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 ALV specifically: ALV IV at 28.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a ALV butterfly, with a market-implied 1-standard-deviation move of approximately 8.26% (roughly $9.49 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 ALV expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALV should anchor to the underlying notional of $114.92 per share and to the trader's directional view on ALV stock.
ALV butterfly setup
The ALV 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 ALV near $114.92, 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 ALV 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 ALV shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $110.00 | $7.05 |
| Sell 2 | Call | $115.00 | $3.95 |
| Buy 1 | Call | $120.00 | $1.90 |
ALV butterfly risk and reward
- Net Premium / Debit
- -$105.00
- Max Profit (per contract)
- $344.75
- Max Loss (per contract)
- -$105.00
- Breakeven(s)
- $111.05, $118.95
- Risk / Reward Ratio
- 3.283
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.
ALV butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ALV. 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% | -$105.00 |
| $25.42 | -77.9% | -$105.00 |
| $50.83 | -55.8% | -$105.00 |
| $76.24 | -33.7% | -$105.00 |
| $101.64 | -11.6% | -$105.00 |
| $127.05 | +10.6% | -$105.00 |
| $152.46 | +32.7% | -$105.00 |
| $177.87 | +54.8% | -$105.00 |
| $203.28 | +76.9% | -$105.00 |
| $228.69 | +99.0% | -$105.00 |
When traders use butterfly on ALV
Butterflies on ALV are pinning bets - traders use them when they expect ALV 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.
ALV thesis for this butterfly
The market-implied 1-standard-deviation range for ALV extends from approximately $105.43 on the downside to $124.41 on the upside. A ALV long call butterfly is a pinning play: it pays maximum at the middle strike if ALV settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALV IV rank near 9.36% 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 ALV at 28.80%. As a Consumer Cyclical name, ALV options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALV-specific events.
ALV 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. ALV positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALV alongside the broader basket even when ALV-specific fundamentals are unchanged. Always rebuild the position from current ALV chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ALV?
- A butterfly on ALV is the butterfly strategy applied to ALV (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 ALV stock trading near $114.92, the strikes shown on this page are snapped to the nearest listed ALV chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALV 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 ALV butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 28.80%), the computed maximum profit is $344.75 per contract and the computed maximum loss is -$105.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALV butterfly?
- The breakeven for the ALV butterfly priced on this page is roughly $111.05 and $118.95 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 ALV market-implied 1-standard-deviation expected move is approximately 8.26%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ALV?
- Butterflies on ALV are pinning bets - traders use them when they expect ALV 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 ALV implied volatility affect this butterfly?
- ALV ATM IV is at 28.80% with IV rank near 9.36%, 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.