DMAC Butterfly Strategy
DMAC (DiaMedica Therapeutics Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
DiaMedica Therapeutics Inc., a clinical stage biopharmaceutical company, develops treatments for neurological and kidney diseases. The company's lead drug candidate is DM199, a recombinant human tissue kallikrein-1 protein, which is in Phase 2 REDUX trial for the treatment of patients with moderate or severe chronic kidney disease caused by Type I or Type II diabetes; and Phase 2/3 REMEDY2 trials for the treatment of patients with acute ischemic stroke. It is also developing DM300 that is in pre-clinical stage for the treatment of inflammatory diseases. The company was formerly known as DiaMedica Inc. and changed its name to DiaMedica Therapeutics Inc. in December 2016. DiaMedica Therapeutics Inc. was incorporated in 2000 and is headquartered in Minneapolis, Minnesota.
DMAC (DiaMedica Therapeutics Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $337.3M, a beta of 0.99 versus the broader market, a 52-week range of 3.475-10.4195, average daily share volume of 198K, a public-listing history dating back to 2012, approximately 27 full-time employees. These structural characteristics shape how DMAC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.99 places DMAC roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on DMAC?
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 DMAC snapshot
As of May 15, 2026, spot at $6.05, ATM IV 109.00%, IV rank 23.19%, expected move 31.25%. The butterfly on DMAC 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 DMAC specifically: DMAC IV at 109.00% is on the cheap side of its 1-year range, which favors premium-buying structures like a DMAC butterfly, with a market-implied 1-standard-deviation move of approximately 31.25% (roughly $1.89 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 DMAC expiries trade a higher absolute premium for lower per-day decay. Position sizing on DMAC should anchor to the underlying notional of $6.05 per share and to the trader's directional view on DMAC stock.
DMAC butterfly setup
The DMAC 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 DMAC near $6.05, the first option leg uses a $5.75 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DMAC 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 DMAC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $5.75 | N/A |
| Sell 2 | Call | $6.05 | N/A |
| Buy 1 | Call | $6.35 | N/A |
DMAC 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.
DMAC butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DMAC. 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 DMAC
Butterflies on DMAC are pinning bets - traders use them when they expect DMAC 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.
DMAC thesis for this butterfly
The market-implied 1-standard-deviation range for DMAC extends from approximately $4.16 on the downside to $7.94 on the upside. A DMAC long call butterfly is a pinning play: it pays maximum at the middle strike if DMAC settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DMAC IV rank near 23.19% 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 DMAC at 109.00%. As a Healthcare name, DMAC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DMAC-specific events.
DMAC 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. DMAC positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DMAC alongside the broader basket even when DMAC-specific fundamentals are unchanged. Always rebuild the position from current DMAC chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DMAC?
- A butterfly on DMAC is the butterfly strategy applied to DMAC (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 DMAC stock trading near $6.05, the strikes shown on this page are snapped to the nearest listed DMAC chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DMAC 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 DMAC butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 109.00%), 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 DMAC butterfly?
- The breakeven for the DMAC 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 DMAC market-implied 1-standard-deviation expected move is approximately 31.25%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DMAC?
- Butterflies on DMAC are pinning bets - traders use them when they expect DMAC 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 DMAC implied volatility affect this butterfly?
- DMAC ATM IV is at 109.00% with IV rank near 23.19%, 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.