CAE Butterfly Strategy
CAE (CAE Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NASDAQ.
CAE Inc. is a global entity dedicated to delivering advanced simulation-based training and vital operational assistance. The company structures its diverse operations into three primary business segments: Civil Aviation, Defense and Security, and Healthcare. Its Civil Aviation division offers an extensive suite of training solutions for various aviation professionals, including flight, cabin, maintenance, and ground personnel, across commercial, business, and helicopter sectors. This segment also manufactures cutting-edge flight simulation training devices, provides initial pilot (ab initio) instruction, and offers crew placement services. Furthermore, it supplies integrated digital platforms for crew management, training operations, and optimization software. The Defense and Security segment is focused on providing crucial training and mission support capabilities for military forces engaged in multi-domain operations.
CAE (CAE Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $8.42B, a trailing P/E of 40.62, a beta of 1.04 versus the broader market, a 52-week range of 22.76-34.24, average daily share volume of 812K, a public-listing history dating back to 2002, approximately 13K full-time employees. These structural characteristics shape how CAE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.04 places CAE roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 40.62 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. CAE pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on CAE?
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.
CAE snapshot
As of August 14, 2026, spot at $26.24, ATM IV 39.70%, IV rank 4.32%, expected move 11.38%. The butterfly on CAE 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 CAE specifically: CAE IV at 39.70% is on the cheap side of its 1-year range, which favors premium-buying structures like a CAE butterfly, with a market-implied 1-standard-deviation move of approximately 11.38% (roughly $2.99 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 CAE expiries trade a higher absolute premium for lower per-day decay. Position sizing on CAE should anchor to the underlying notional of $26.24 per share and to the trader's directional view on CAE stock.
CAE butterfly setup
The CAE 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 CAE at $26.24 on that close, the first option leg uses a $24.93 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CAE 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 CAE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $24.93 | N/A |
| Sell 2 | Call | $26.24 | N/A |
| Buy 1 | Call | $27.55 | N/A |
CAE 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.
CAE butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on CAE. 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 CAE
Butterflies on CAE are pinning bets - traders use them when they expect CAE 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.
CAE thesis for this butterfly
The market-implied 1-standard-deviation range for CAE extends from approximately $23.25 on the downside to $29.23 on the upside. A CAE long call butterfly is a pinning play: it pays maximum at the middle strike if CAE settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current CAE IV rank near 4.32% 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 CAE at 39.70%. As a Industrials name, CAE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CAE-specific events.
CAE 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. CAE positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CAE alongside the broader basket even when CAE-specific fundamentals are unchanged. Always rebuild the position from current CAE chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on CAE?
- A butterfly on CAE is the butterfly strategy applied to CAE (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 CAE stock at $26.24 on the most recent close, the strikes shown on this page are snapped to the nearest listed CAE chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are CAE 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 CAE butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 39.70%), 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 CAE butterfly?
- The breakeven for the CAE 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 CAE market-implied 1-standard-deviation expected move in the same options snapshot is approximately 11.38%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on CAE?
- Butterflies on CAE are pinning bets - traders use them when they expect CAE 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 CAE implied volatility affect this butterfly?
- CAE ATM IV is at 39.70% with IV rank near 4.32%, 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.