CHE Butterfly Strategy
CHE (Chemed Corporation), in the Healthcare sector, (Medical - Care Facilities industry), listed on NYSE.
Chemed Corporation provides hospice and palliative care services to patients through a network of physicians, registered nurses, home health aides, social workers, clergy, and volunteers primarily in the United States. The company operates in two segments, VITAS and Roto-Rooter. It offers plumbing, drain cleaning, excavation, water restoration, and other related services to residential and commercial customers through company-owned branches, independent contractors, and franchisees. The company was incorporated in 1970 and is headquartered in Cincinnati, Ohio.
CHE (Chemed Corporation) trades in the Healthcare sector, specifically Medical - Care Facilities, with a market capitalization of approximately $5.63B, a trailing P/E of 22.32, a beta of 0.54 versus the broader market, a 52-week range of 365.21-583.96, average daily share volume of 271K, a public-listing history dating back to 1973, approximately 16K full-time employees. These structural characteristics shape how CHE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.54 indicates CHE has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. CHE pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on CHE?
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 CHE snapshot
As of May 15, 2026, spot at $434.70, ATM IV 23.90%, IV rank 19.01%, expected move 6.85%. The butterfly on CHE 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 CHE specifically: CHE IV at 23.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a CHE butterfly, with a market-implied 1-standard-deviation move of approximately 6.85% (roughly $29.79 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 CHE expiries trade a higher absolute premium for lower per-day decay. Position sizing on CHE should anchor to the underlying notional of $434.70 per share and to the trader's directional view on CHE stock.
CHE butterfly setup
The CHE 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 CHE near $434.70, the first option leg uses a $410.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CHE 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 CHE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $410.00 | $28.85 |
| Sell 2 | Call | $430.00 | $13.85 |
| Buy 1 | Call | $460.00 | $3.48 |
CHE butterfly risk and reward
- Net Premium / Debit
- -$462.50
- Max Profit (per contract)
- $1,352.68
- Max Loss (per contract)
- -$1,462.50
- Breakeven(s)
- $414.63, $445.38
- Risk / Reward Ratio
- 0.925
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.
CHE butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on CHE. 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% | -$462.50 |
| $96.12 | -77.9% | -$462.50 |
| $192.24 | -55.8% | -$462.50 |
| $288.35 | -33.7% | -$462.50 |
| $384.46 | -11.6% | -$462.50 |
| $480.58 | +10.6% | -$1,462.50 |
| $576.69 | +32.7% | -$1,462.50 |
| $672.80 | +54.8% | -$1,462.50 |
| $768.92 | +76.9% | -$1,462.50 |
| $865.03 | +99.0% | -$1,462.50 |
When traders use butterfly on CHE
Butterflies on CHE are pinning bets - traders use them when they expect CHE 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.
CHE thesis for this butterfly
The market-implied 1-standard-deviation range for CHE extends from approximately $404.91 on the downside to $464.49 on the upside. A CHE long call butterfly is a pinning play: it pays maximum at the middle strike if CHE settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current CHE IV rank near 19.01% 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 CHE at 23.90%. As a Healthcare name, CHE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CHE-specific events.
CHE 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. CHE positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CHE alongside the broader basket even when CHE-specific fundamentals are unchanged. Always rebuild the position from current CHE chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on CHE?
- A butterfly on CHE is the butterfly strategy applied to CHE (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 CHE stock trading near $434.70, the strikes shown on this page are snapped to the nearest listed CHE chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CHE 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 CHE butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 23.90%), the computed maximum profit is $1,352.68 per contract and the computed maximum loss is -$1,462.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CHE butterfly?
- The breakeven for the CHE butterfly priced on this page is roughly $414.63 and $445.38 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 CHE market-implied 1-standard-deviation expected move is approximately 6.85%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on CHE?
- Butterflies on CHE are pinning bets - traders use them when they expect CHE 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 CHE implied volatility affect this butterfly?
- CHE ATM IV is at 23.90% with IV rank near 19.01%, 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.