DEI Butterfly Strategy
DEI (Douglas Emmett, Inc.), in the Real Estate sector, (REIT - Office industry), listed on NYSE.
Douglas Emmett, Inc. (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.
DEI (Douglas Emmett, Inc.) trades in the Real Estate sector, specifically REIT - Office, with a market capitalization of approximately $1.97B, a beta of 1.17 versus the broader market, a 52-week range of 9.04-16.99, average daily share volume of 2.6M, a public-listing history dating back to 2006, approximately 770 full-time employees. These structural characteristics shape how DEI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.17 places DEI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. DEI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on DEI?
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 DEI snapshot
As of May 15, 2026, spot at $11.67, ATM IV 49.80%, IV rank 24.08%, expected move 14.28%. The butterfly on DEI 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 DEI specifically: DEI IV at 49.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a DEI butterfly, with a market-implied 1-standard-deviation move of approximately 14.28% (roughly $1.67 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 DEI expiries trade a higher absolute premium for lower per-day decay. Position sizing on DEI should anchor to the underlying notional of $11.67 per share and to the trader's directional view on DEI stock.
DEI butterfly setup
The DEI 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 DEI near $11.67, the first option leg uses a $11.09 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DEI 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 DEI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $11.09 | N/A |
| Sell 2 | Call | $11.67 | N/A |
| Buy 1 | Call | $12.25 | N/A |
DEI 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.
DEI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DEI. 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 DEI
Butterflies on DEI are pinning bets - traders use them when they expect DEI 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.
DEI thesis for this butterfly
The market-implied 1-standard-deviation range for DEI extends from approximately $10.00 on the downside to $13.34 on the upside. A DEI long call butterfly is a pinning play: it pays maximum at the middle strike if DEI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DEI IV rank near 24.08% 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 DEI at 49.80%. As a Real Estate name, DEI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DEI-specific events.
DEI 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. DEI positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DEI alongside the broader basket even when DEI-specific fundamentals are unchanged. Always rebuild the position from current DEI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DEI?
- A butterfly on DEI is the butterfly strategy applied to DEI (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 DEI stock trading near $11.67, the strikes shown on this page are snapped to the nearest listed DEI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DEI 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 DEI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 49.80%), 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 DEI butterfly?
- The breakeven for the DEI butterfly priced on this page is no defined breakeven on the modeled curve 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 DEI market-implied 1-standard-deviation expected move is approximately 14.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DEI?
- Butterflies on DEI are pinning bets - traders use them when they expect DEI 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 DEI implied volatility affect this butterfly?
- DEI ATM IV is at 49.80% with IV rank near 24.08%, 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.