DG Butterfly Strategy
DG (Dollar General Corporation), in the Consumer Defensive sector, (Discount Stores industry), listed on NYSE.
Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, Midwestern, and eastern United States. It offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, disinfectants, and laundry products; packaged food comprising cereals, pasta, canned soups, fruits and vegetables, condiments, spices, sugar, and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer, and wine. The company's consumable products also comprise snacks, such as candies, cookies, crackers, salty snacks, and carbonated beverages; health and beauty products, including over-the-counter medicines and personal care products, such as soaps, body washes, shampoos, cosmetics, and dental hygiene and foot care products; pet supplies and pet food; and tobacco products. In addition, it offers seasonal products comprising holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, and automotive and home office supplies; and home products that include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, and bed and bath soft goods. Further, the company provides apparel, which comprise casual everyday apparel for infants, toddlers, girls, boys, women, and men, as well as socks, underwear, disposable diapers, shoes, and accessories. As of February 25, 2022, it operated 18,190 stores in 47 states in the United States.
DG (Dollar General Corporation) trades in the Consumer Defensive sector, specifically Discount Stores, with a market capitalization of approximately $22.41B, a trailing P/E of 14.81, a beta of 0.28 versus the broader market, a 52-week range of 86.25-158.23, average daily share volume of 3.2M, a public-listing history dating back to 2009, approximately 194K full-time employees. These structural characteristics shape how DG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.28 indicates DG has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. DG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on DG?
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 DG snapshot
As of May 15, 2026, spot at $103.09, ATM IV 55.25%, IV rank 100.00%, expected move 15.84%. The butterfly on DG 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 28-day expiry.
Why this butterfly structure on DG specifically: DG IV at 55.25% is rich versus its 1-year range, which makes a premium-buying DG butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 15.84% (roughly $16.33 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated DG expiries trade a higher absolute premium for lower per-day decay. Position sizing on DG should anchor to the underlying notional of $103.09 per share and to the trader's directional view on DG stock.
DG butterfly setup
The DG 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 DG near $103.09, the first option leg uses a $98.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DG chain at a 28-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 DG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $98.00 | $9.73 |
| Sell 2 | Call | $103.00 | $6.83 |
| Buy 1 | Call | $108.00 | $4.55 |
DG butterfly risk and reward
- Net Premium / Debit
- -$62.50
- Max Profit (per contract)
- $395.20
- Max Loss (per contract)
- -$62.50
- Breakeven(s)
- $98.63, $107.38
- Risk / Reward Ratio
- 6.323
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.
DG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DG. 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% | -$62.50 |
| $22.80 | -77.9% | -$62.50 |
| $45.60 | -55.8% | -$62.50 |
| $68.39 | -33.7% | -$62.50 |
| $91.18 | -11.6% | -$62.50 |
| $113.97 | +10.6% | -$62.50 |
| $136.77 | +32.7% | -$62.50 |
| $159.56 | +54.8% | -$62.50 |
| $182.35 | +76.9% | -$62.50 |
| $205.14 | +99.0% | -$62.50 |
When traders use butterfly on DG
Butterflies on DG are pinning bets - traders use them when they expect DG 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.
DG thesis for this butterfly
The market-implied 1-standard-deviation range for DG extends from approximately $86.76 on the downside to $119.42 on the upside. A DG long call butterfly is a pinning play: it pays maximum at the middle strike if DG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DG IV rank near 100.00% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on DG at 55.25%. As a Consumer Defensive name, DG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DG-specific events.
DG 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. DG positions also carry Consumer Defensive sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DG alongside the broader basket even when DG-specific fundamentals are unchanged. Always rebuild the position from current DG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DG?
- A butterfly on DG is the butterfly strategy applied to DG (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 DG stock trading near $103.09, the strikes shown on this page are snapped to the nearest listed DG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DG 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 DG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 55.25%), the computed maximum profit is $395.20 per contract and the computed maximum loss is -$62.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DG butterfly?
- The breakeven for the DG butterfly priced on this page is roughly $98.63 and $107.38 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 DG market-implied 1-standard-deviation expected move is approximately 15.84%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DG?
- Butterflies on DG are pinning bets - traders use them when they expect DG 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 DG implied volatility affect this butterfly?
- DG ATM IV is at 55.25% with IV rank near 100.00%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.