AVTX Butterfly Strategy
AVTX (Avalo Therapeutics, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Avalo Therapeutics, Inc., a clinical-stage precision medicine company, discovers, develops, and commercializes targeted therapeutics for patients with unmet clinical need in immunology, immuno-oncology, and rare genetic diseases. It develops AVTX-002, a fully human anti-LIGHT monoclonal antibody, which is under Phase II clinical trial for the treatment of non-eosinophilic asthma, as well as inflammatory bowel disease, including moderate to severe Crohn's disease, and ulcerative colitis; and Phase III clinical trial for the treatment of COVID-19 acute respiratory distress syndrome. The company also engages in developing AVTX-007, a fully human Anti-IL-18 monoclonal antibody that is under Phase I clinical trial for the treatment of still's disease, including adult-onset still's disease and systemic juvenile idiopathic arthritis. Its products for rare genetic diseases in Phase III clinical trials include AVTX-801, a D-galactose substrate replacement therapy for the treatment of phosphoglucomutase 1 deficiency (PGM1), also known as PGM1-CDG; and AVTX-803, a L-fucose substrate replacement therapy for the treatment of LADII, also known as SLC35C1-CDG. The company was formerly known as Cerecor Inc. and changed its name to Avalo Therapeutics, Inc. in August 2021. Avalo Therapeutics, Inc. was incorporated in 2011 and is headquartered in Rockville, Maryland.
AVTX (Avalo Therapeutics, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $224.2M, a beta of 0.79 versus the broader market, a 52-week range of 3.431-24.27, average daily share volume of 1.3M, a public-listing history dating back to 2015, approximately 23 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.
Current AVTX snapshot
As of May 15, 2026, spot at $17.52, ATM IV 82.50%, IV rank 14.28%, expected move 23.65%. The butterfly on AVTX 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 AVTX specifically: AVTX IV at 82.50% 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 23.65% (roughly $4.14 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 AVTX expiries trade a higher absolute premium for lower per-day decay. Position sizing on AVTX should anchor to the underlying notional of $17.52 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 near $17.52, the first option leg uses a $16.64 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 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 AVTX shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $16.64 | N/A |
| Sell 2 | Call | $17.52 | N/A |
| Buy 1 | Call | $18.40 | 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 $13.38 on the downside to $21.66 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 14.28% 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 82.50%. 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 trading near $17.52, the strikes shown on this page are snapped to the nearest listed AVTX chain strike and the premiums come straight from the end-of-day 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 82.50%), 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 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 AVTX market-implied 1-standard-deviation expected move is approximately 23.65%; 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 82.50% with IV rank near 14.28%, 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.