BFLY Covered Call Strategy
BFLY (Butterfly Network, Inc.), in the Healthcare sector, (Medical - Devices industry), listed on NYSE.
Butterfly Network, Inc., a digital health company, develops, manufactures, and commercializes ultrasound imaging solutions in the United States and internationally. It offers Butterfly iQ, a handheld and single-probe whole body ultrasound system; Butterfly iQ+, a point-of-care ultrasound imaging device that connects with a smartphone, tablet, and hospital computer system; and Butterfly Blueprint, a system-wide ultrasound platform with Compass software that integrates into a healthcare system's clinical and administrative infrastructure. The company also provides Butterfly system, which includes probes, and related accessories and software subscriptions, to healthcare systems, physicians, and healthcare providers through a direct sales force, distributors, and eCommerce channel. In addition, it offers cloud-based software solutions to healthcare systems, teleguidance, in-app educational tutorials, and formal education programs through its Butterfly Academy software, as well as clinical support and services. Butterfly Network, Inc. was incorporated in 2011 and is headquartered in Guilford, Connecticut.
BFLY (Butterfly Network, Inc.) trades in the Healthcare sector, specifically Medical - Devices, with a market capitalization of approximately $1.03B, a beta of 2.28 versus the broader market, a 52-week range of 1.32-5.72, average daily share volume of 6.0M, a public-listing history dating back to 2020, approximately 190 full-time employees. These structural characteristics shape how BFLY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.28 indicates BFLY has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a covered call on BFLY?
A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income.
Current BFLY snapshot
As of May 15, 2026, spot at $3.83, ATM IV 87.00%, IV rank 26.58%, expected move 24.94%. The covered call on BFLY 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 covered call structure on BFLY specifically: BFLY IV at 87.00% is on the cheap side of its 1-year range, which means a premium-selling BFLY covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 24.94% (roughly $0.96 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 BFLY expiries trade a higher absolute premium for lower per-day decay. Position sizing on BFLY should anchor to the underlying notional of $3.83 per share and to the trader's directional view on BFLY stock.
BFLY covered call setup
The BFLY covered call below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With BFLY near $3.83, the first option leg uses a $4.02 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed BFLY 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 BFLY shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $3.83 | long |
| Sell 1 | Call | $4.02 | N/A |
BFLY covered call 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 short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium.
BFLY covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on BFLY. 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 covered call on BFLY
Covered calls on BFLY are an income strategy run on existing BFLY stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
BFLY thesis for this covered call
The market-implied 1-standard-deviation range for BFLY extends from approximately $2.87 on the downside to $4.79 on the upside. A BFLY covered call collects premium on an existing long BFLY position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether BFLY will breach that level within the expiration window. Current BFLY IV rank near 26.58% 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 BFLY at 87.00%. As a Healthcare name, BFLY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to BFLY-specific events.
BFLY covered call positions are structurally neutral to slightly bullish; 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. BFLY positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move BFLY alongside the broader basket even when BFLY-specific fundamentals are unchanged. Short-premium structures like a covered call on BFLY carry tail risk when realized volatility exceeds the implied move; review historical BFLY earnings reactions and macro stress periods before sizing. Always rebuild the position from current BFLY chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on BFLY?
- A covered call on BFLY is the covered call strategy applied to BFLY (stock). The strategy is structurally neutral to slightly bullish: A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income. With BFLY stock trading near $3.83, the strikes shown on this page are snapped to the nearest listed BFLY chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are BFLY covered call max profit and max loss calculated?
- Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium. For the BFLY covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 87.00%), 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 BFLY covered call?
- The breakeven for the BFLY covered call 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 BFLY market-implied 1-standard-deviation expected move is approximately 24.94%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a covered call on BFLY?
- Covered calls on BFLY are an income strategy run on existing BFLY stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current BFLY implied volatility affect this covered call?
- BFLY ATM IV is at 87.00% with IV rank near 26.58%, 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.