CTSH Butterfly Strategy
CTSH (Cognizant Technology Solutions Corporation), in the Technology sector, (Information Technology Services industry), listed on NASDAQ.
Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. It operates through four segments: Financial Services; Healthcare; Products and Resources; and Communications, Media and Technology. The company offers customer experience enhancement, robotic process automation, analytics, and AI services in areas, such as digital lending, fraud detection, and next generation payments; the shift towards consumerism, outcome-based contracting, digital health, delivering integrated seamless, omni-channel, and patient-centered experience; and services that drive operational improvements in areas, such as clinical development, pharmacovigilance, and manufacturing, as well as claims processing, enrollment, membership, and billing to healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech, and medical device companies. It also provides solution to manufacturers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services; and digital content, the creation of personalized user experience, and acceleration of digital engineering services to information, media and entertainment, and communications and technology companies. The company was founded in 1994 and is headquartered in Teaneck, New Jersey.
CTSH (Cognizant Technology Solutions Corporation) trades in the Technology sector, specifically Information Technology Services, with a market capitalization of approximately $21.78B, a trailing P/E of 9.84, a beta of 0.80 versus the broader market, a 52-week range of 45.48-87.03, average daily share volume of 7.0M, a public-listing history dating back to 1998, approximately 336K full-time employees. These structural characteristics shape how CTSH stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.80 places CTSH roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 9.84 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. CTSH pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on CTSH?
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 CTSH snapshot
As of May 15, 2026, spot at $47.12, ATM IV 41.20%, IV rank 64.82%, expected move 11.81%. The butterfly on CTSH 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 CTSH specifically: CTSH IV at 41.20% 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 11.81% (roughly $5.57 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 CTSH expiries trade a higher absolute premium for lower per-day decay. Position sizing on CTSH should anchor to the underlying notional of $47.12 per share and to the trader's directional view on CTSH stock.
CTSH butterfly setup
The CTSH 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 CTSH near $47.12, the first option leg uses a $45.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CTSH 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 CTSH shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $45.00 | $3.35 |
| Sell 2 | Call | $47.50 | $2.05 |
| Buy 1 | Call | $50.00 | $1.45 |
CTSH butterfly risk and reward
- Net Premium / Debit
- -$70.00
- Max Profit (per contract)
- $166.18
- Max Loss (per contract)
- -$70.00
- Breakeven(s)
- $45.70, $49.30
- Risk / Reward Ratio
- 2.374
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.
CTSH butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on CTSH. 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% | -$70.00 |
| $10.43 | -77.9% | -$70.00 |
| $20.84 | -55.8% | -$70.00 |
| $31.26 | -33.7% | -$70.00 |
| $41.68 | -11.5% | -$70.00 |
| $52.10 | +10.6% | -$70.00 |
| $62.51 | +32.7% | -$70.00 |
| $72.93 | +54.8% | -$70.00 |
| $83.35 | +76.9% | -$70.00 |
| $93.77 | +99.0% | -$70.00 |
When traders use butterfly on CTSH
Butterflies on CTSH are pinning bets - traders use them when they expect CTSH 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.
CTSH thesis for this butterfly
The market-implied 1-standard-deviation range for CTSH extends from approximately $41.55 on the downside to $52.69 on the upside. A CTSH long call butterfly is a pinning play: it pays maximum at the middle strike if CTSH settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current CTSH IV rank near 64.82% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on CTSH should anchor more to the directional view and the expected-move geometry. As a Technology name, CTSH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CTSH-specific events.
CTSH 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. CTSH positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CTSH alongside the broader basket even when CTSH-specific fundamentals are unchanged. Always rebuild the position from current CTSH chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on CTSH?
- A butterfly on CTSH is the butterfly strategy applied to CTSH (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 CTSH stock trading near $47.12, the strikes shown on this page are snapped to the nearest listed CTSH chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CTSH 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 CTSH butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 41.20%), the computed maximum profit is $166.18 per contract and the computed maximum loss is -$70.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CTSH butterfly?
- The breakeven for the CTSH butterfly priced on this page is roughly $45.70 and $49.30 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 CTSH market-implied 1-standard-deviation expected move is approximately 11.81%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on CTSH?
- Butterflies on CTSH are pinning bets - traders use them when they expect CTSH 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 CTSH implied volatility affect this butterfly?
- CTSH ATM IV is at 41.20% with IV rank near 64.82%, 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.