AVTX Butterfly Strategy
AVTX (Avalo Therapeutics, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Avalo Therapeutics, Inc. is a precision medicine company in the clinical development phase, dedicated to identifying, advancing, and marketing specialized treatments for patients experiencing critical unmet medical needs across the fields of immunology, immuno-oncology, and rare genetic disorders. Among its key pipeline assets is AVTX-002, a fully human monoclonal antibody designed to inhibit LIGHT. This drug is currently undergoing Phase II clinical trials for non-eosinophilic asthma and inflammatory bowel diseases, specifically moderate to severe Crohn's disease and ulcerative colitis. Furthermore, AVTX-002 is also being investigated in Phase III for its potential to treat acute respiratory distress syndrome caused by COVID-19. The company is also advancing AVTX-007, a fully human monoclonal antibody targeting IL-18, which is progressing through Phase I clinical studies for Still's disease, encompassing both adult-onset Still's disease and systemic juvenile idiopathic arthritis. Avalo's late-stage pipeline includes two products addressing rare genetic conditions, both in Phase III clinical trials: AVTX-801, a D-galactose substrate replacement therapy for phosphoglucomutase 1 deficiency (PGM1), also known as PGM1-CDG; and AVTX-803, an L-fucose substrate replacement therapy intended for LADII, medically referred to as SLC35C1-CDG.
AVTX (Avalo Therapeutics, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $1.03B, a beta of 0.79 versus the broader market, a 52-week range of 8.41-24.27, average daily share volume of 1.6M, a public-listing history dating back to 2015, approximately 33 full-time employees. These structural characteristics shape how AVTX stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.79 places AVTX roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on AVTX?
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.
AVTX snapshot
As of August 14, 2026, spot at $19.55, ATM IV 71.80%, IV rank 10.64%, expected move 20.58%. The butterfly on AVTX below is built from the end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.
Why this butterfly structure on AVTX specifically: AVTX IV at 71.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a AVTX butterfly, with a market-implied 1-standard-deviation move of approximately 20.58% (roughly $4.02 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated AVTX expiries trade a higher absolute premium for lower per-day decay. Position sizing on AVTX should anchor to the underlying notional of $19.55 per share and to the trader's directional view on AVTX stock.
AVTX butterfly setup
The AVTX 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 AVTX at $19.55 on that close, the first option leg uses a $18.57 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AVTX chain at a 35-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 AVTX shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $18.57 | N/A |
| Sell 2 | Call | $19.55 | N/A |
| Buy 1 | Call | $20.53 | N/A |
AVTX 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.
AVTX butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on AVTX. 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 AVTX
Butterflies on AVTX are pinning bets - traders use them when they expect AVTX 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.
AVTX thesis for this butterfly
The market-implied 1-standard-deviation range for AVTX extends from approximately $15.53 on the downside to $23.57 on the upside. A AVTX long call butterfly is a pinning play: it pays maximum at the middle strike if AVTX settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current AVTX IV rank near 10.64% 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 AVTX at 71.80%. As a Healthcare name, AVTX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AVTX-specific events.
AVTX 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. AVTX positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AVTX alongside the broader basket even when AVTX-specific fundamentals are unchanged. Always rebuild the position from current AVTX chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on AVTX?
- A butterfly on AVTX is the butterfly strategy applied to AVTX (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 AVTX stock at $19.55 on the most recent close, the strikes shown on this page are snapped to the nearest listed AVTX chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are AVTX 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 AVTX butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 71.80%), 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 AVTX butterfly?
- The breakeven for the AVTX butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from the end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The AVTX market-implied 1-standard-deviation expected move in the same options snapshot is approximately 20.58%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on AVTX?
- Butterflies on AVTX are pinning bets - traders use them when they expect AVTX 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 AVTX implied volatility affect this butterfly?
- AVTX ATM IV is at 71.80% with IV rank near 10.64%, 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.