DCI Butterfly Strategy
DCI (Donaldson Company, Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Donaldson Company, Inc. manufactures and sells filtration systems and replacement parts worldwide. The company operates through two segments, Engine Products and Industrial Products. Its Engine Products segment provides replacement filters for air and liquid filtration applications; air filtration systems; liquid filtration systems for fuel, lube, and hydraulic applications; exhaust and emissions systems and sensors; indicators; and monitoring systems. This segment sells its products to original equipment manufacturers (OEMs) in the construction, mining, agriculture, aerospace, defense, and transportation markets; and to independent distributors, OEM dealer networks, private label accounts, and large fleets. The company's Industrial Products segment offers dust, fume, and mist collectors; compressed air purification systems; gas and liquid filtration for food, beverage, and industrial processes; air filtration systems for gas turbines; polytetrafluoroethylene membrane-based products; and specialized air and gas filtration systems for applications, including hard disk drives, semi-conductor manufacturing and sensors, indicators, and monitoring systems. This segment sells its products to various dealers, distributors, OEMs of gas-fired turbines, and OEMs and end-users requiring air filtration solutions and replacement filters.
DCI (Donaldson Company, Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $9.72B, a trailing P/E of 25.63, a beta of 1.00 versus the broader market, a 52-week range of 67.71-112.84, average daily share volume of 691K, a public-listing history dating back to 1980, approximately 14K full-time employees. These structural characteristics shape how DCI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.00 places DCI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. DCI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on DCI?
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 DCI snapshot
As of May 15, 2026, spot at $81.64, ATM IV 33.30%, IV rank 5.78%, expected move 9.55%. The butterfly on DCI 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 98-day expiry.
Why this butterfly structure on DCI specifically: DCI IV at 33.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a DCI butterfly, with a market-implied 1-standard-deviation move of approximately 9.55% (roughly $7.79 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated DCI expiries trade a higher absolute premium for lower per-day decay. Position sizing on DCI should anchor to the underlying notional of $81.64 per share and to the trader's directional view on DCI stock.
DCI butterfly setup
The DCI 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 DCI near $81.64, the first option leg uses a $80.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DCI chain at a 98-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 DCI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $80.00 | $6.00 |
| Sell 2 | Call | $80.00 | $6.00 |
| Buy 1 | Call | $85.00 | $3.35 |
DCI butterfly risk and reward
- Net Premium / Debit
- +$265.00
- Max Profit (per contract)
- $265.00
- Max Loss (per contract)
- -$235.00
- Breakeven(s)
- $82.65
- Risk / Reward Ratio
- 1.128
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.
DCI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DCI. 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% | +$265.00 |
| $18.06 | -77.9% | +$265.00 |
| $36.11 | -55.8% | +$265.00 |
| $54.16 | -33.7% | +$265.00 |
| $72.21 | -11.6% | +$265.00 |
| $90.26 | +10.6% | -$235.00 |
| $108.31 | +32.7% | -$235.00 |
| $126.36 | +54.8% | -$235.00 |
| $144.41 | +76.9% | -$235.00 |
| $162.46 | +99.0% | -$235.00 |
When traders use butterfly on DCI
Butterflies on DCI are pinning bets - traders use them when they expect DCI 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.
DCI thesis for this butterfly
The market-implied 1-standard-deviation range for DCI extends from approximately $73.85 on the downside to $89.43 on the upside. A DCI long call butterfly is a pinning play: it pays maximum at the middle strike if DCI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DCI IV rank near 5.78% 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 DCI at 33.30%. As a Industrials name, DCI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DCI-specific events.
DCI 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. DCI positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DCI alongside the broader basket even when DCI-specific fundamentals are unchanged. Always rebuild the position from current DCI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DCI?
- A butterfly on DCI is the butterfly strategy applied to DCI (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 DCI stock trading near $81.64, the strikes shown on this page are snapped to the nearest listed DCI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DCI 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 DCI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.30%), the computed maximum profit is $265.00 per contract and the computed maximum loss is -$235.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DCI butterfly?
- The breakeven for the DCI butterfly priced on this page is roughly $82.65 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 DCI market-implied 1-standard-deviation expected move is approximately 9.55%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DCI?
- Butterflies on DCI are pinning bets - traders use them when they expect DCI 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 DCI implied volatility affect this butterfly?
- DCI ATM IV is at 33.30% with IV rank near 5.78%, 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.