How are BWA 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 BWA butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 43.00%), the computed maximum profit is $172.20 per contract and the computed maximum loss is -$50.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a BWA butterfly?

The breakeven for the BWA butterfly priced on this page is roughly $60.50 and $64.50 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 BWA market-implied 1-standard-deviation expected move is approximately 12.33%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current BWA implied volatility affect this butterfly?

BWA ATM IV is at 43.00% with IV rank near 40.40%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.

BWA Butterfly Strategy

BWA (BorgWarner Inc.), in the Consumer Cyclical sector, (Auto - Parts industry), listed on NYSE.

BorgWarner Inc. provides solutions for combustion, hybrid, and electric vehicles worldwide. The company operates through four segments: Air Management, E-Propulsion & Drivetrain, Fuel Injection, and Aftermarket. The Air Management segment offers turbochargers, eBoosters, eTurbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, canisters, cabin heaters, battery modules and systems, battery packs, battery heaters, and battery charging. The E-Propulsion & Drivetrain segment provides rotating electrical components, power electronics, control modules, software, friction, and mechanical products for automatic transmissions and torque-management products. The Fuel Injection segment develops and manufactures gasoline and diesel fuel injection components and systems. The Aftermarket segment sells products and services to independent aftermarket customers and original equipment service customers.

BWA (BorgWarner Inc.) trades in the Consumer Cyclical sector, specifically Auto - Parts, with a market capitalization of approximately $13.72B, a trailing P/E of 37.92, a beta of 0.99 versus the broader market, a 52-week range of 31.83-70.08, average daily share volume of 2.7M, a public-listing history dating back to 1993, approximately 38K full-time employees. These structural characteristics shape how BWA stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.99 places BWA roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 37.92 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. BWA pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on BWA?

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 BWA snapshot

As of May 15, 2026, spot at $63.09, ATM IV 43.00%, IV rank 40.40%, expected move 12.33%. The butterfly on BWA 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 BWA specifically: BWA IV at 43.00% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 12.33% (roughly $7.78 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 BWA expiries trade a higher absolute premium for lower per-day decay. Position sizing on BWA should anchor to the underlying notional of $63.09 per share and to the trader's directional view on BWA stock.

BWA butterfly setup

The BWA 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 BWA near $63.09, the first option leg uses a $60.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed BWA 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 BWA shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$60.00	$5.55
Sell 2	Call	$62.50	$3.80
Buy 1	Call	$65.00	$2.55

BWA butterfly risk and reward

Net Premium / Debit: -$50.00
Max Profit (per contract): $172.20
Max Loss (per contract): -$50.00
Breakeven(s): $60.50, $64.50
Risk / Reward Ratio: 3.444

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.

BWA butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on BWA. 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%	-$50.00
$13.96	-77.9%	-$50.00
$27.91	-55.8%	-$50.00
$41.86	-33.7%	-$50.00
$55.80	-11.5%	-$50.00
$69.75	+10.6%	-$50.00
$83.70	+32.7%	-$50.00
$97.65	+54.8%	-$50.00
$111.60	+76.9%	-$50.00
$125.55	+99.0%	-$50.00

When traders use butterfly on BWA

Butterflies on BWA are pinning bets - traders use them when they expect BWA 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.

BWA thesis for this butterfly

The market-implied 1-standard-deviation range for BWA extends from approximately $55.31 on the downside to $70.87 on the upside. A BWA long call butterfly is a pinning play: it pays maximum at the middle strike if BWA settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current BWA IV rank near 40.40% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on BWA should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, BWA options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to BWA-specific events.

BWA 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. BWA positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move BWA alongside the broader basket even when BWA-specific fundamentals are unchanged. Always rebuild the position from current BWA chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on BWA?: A butterfly on BWA is the butterfly strategy applied to BWA (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 BWA stock trading near $63.09, the strikes shown on this page are snapped to the nearest listed BWA chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are BWA 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 BWA butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 43.00%), the computed maximum profit is $172.20 per contract and the computed maximum loss is -$50.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a BWA butterfly?: The breakeven for the BWA butterfly priced on this page is roughly $60.50 and $64.50 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 BWA market-implied 1-standard-deviation expected move is approximately 12.33%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on BWA?: Butterflies on BWA are pinning bets - traders use them when they expect BWA 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 BWA implied volatility affect this butterfly?: BWA ATM IV is at 43.00% with IV rank near 40.40%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.