ARI Butterfly Strategy
ARI (Apollo Commercial Real Estate Finance, Inc.), in the Real Estate sector, (REIT - Mortgage industry), listed on NYSE.
Apollo Commercial Real Estate Finance, Inc. operates as a real estate investment trust (REIT) that originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings, and other commercial real estate-related debt investments in the United States. It is qualified as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income taxes, if the company distributes at least 90% of its REIT taxable income to its stockholders. Apollo Commercial Real Estate Finance, Inc. was founded in 2009 and is based in New York, New York.
ARI (Apollo Commercial Real Estate Finance, Inc.) trades in the Real Estate sector, specifically REIT - Mortgage, with a market capitalization of approximately $1.45B, a trailing P/E of 12.00, a beta of 1.42 versus the broader market, a 52-week range of 9.39-11.24, average daily share volume of 1.4M, a public-listing history dating back to 2009. These structural characteristics shape how ARI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.42 indicates ARI has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 12.00 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. ARI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on ARI?
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 ARI snapshot
As of May 15, 2026, spot at $10.87, ATM IV 13.70%, IV rank 1.16%, expected move 3.93%. The butterfly on ARI 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 ARI specifically: ARI IV at 13.70% is on the cheap side of its 1-year range, which favors premium-buying structures like a ARI butterfly, with a market-implied 1-standard-deviation move of approximately 3.93% (roughly $0.43 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 ARI expiries trade a higher absolute premium for lower per-day decay. Position sizing on ARI should anchor to the underlying notional of $10.87 per share and to the trader's directional view on ARI stock.
ARI butterfly setup
The ARI 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 ARI near $10.87, the first option leg uses a $10.33 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ARI 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 ARI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $10.33 | N/A |
| Sell 2 | Call | $10.87 | N/A |
| Buy 1 | Call | $11.41 | N/A |
ARI 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.
ARI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ARI. 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 ARI
Butterflies on ARI are pinning bets - traders use them when they expect ARI 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.
ARI thesis for this butterfly
The market-implied 1-standard-deviation range for ARI extends from approximately $10.44 on the downside to $11.30 on the upside. A ARI long call butterfly is a pinning play: it pays maximum at the middle strike if ARI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ARI IV rank near 1.16% 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 ARI at 13.70%. As a Real Estate name, ARI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ARI-specific events.
ARI 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. ARI positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ARI alongside the broader basket even when ARI-specific fundamentals are unchanged. Always rebuild the position from current ARI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ARI?
- A butterfly on ARI is the butterfly strategy applied to ARI (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 ARI stock trading near $10.87, the strikes shown on this page are snapped to the nearest listed ARI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ARI 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 ARI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 13.70%), 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 ARI butterfly?
- The breakeven for the ARI butterfly priced on this page is no defined breakeven on the modeled curve 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 ARI market-implied 1-standard-deviation expected move is approximately 3.93%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ARI?
- Butterflies on ARI are pinning bets - traders use them when they expect ARI 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 ARI implied volatility affect this butterfly?
- ARI ATM IV is at 13.70% with IV rank near 1.16%, 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.