ELME Butterfly Strategy
ELME (Elme Communities), in the Real Estate sector, (REIT - Office industry), listed on NYSE.
Elme Communities owns and operates uniquely positioned real estate assets in the Washington Metro area. Backed by decades of experience, expertise and ambition, we create value by transforming insights into strategy and strategy into action. As of October 29, 2020, the Company's portfolio of 45 properties includes approximately 3.7 million square feet of commercial space and 6,863 multifamily apartment units. These 45 properties consist of 22 multifamily properties,15 office properties, and 8 retail centers. Our shares trade on the NYSE. With a track record of driving returns and delivering satisfaction, we are a trusted authority in one of the nation's most competitive real estate markets.
ELME (Elme Communities) trades in the Real Estate sector, specifically REIT - Office, with a market capitalization of approximately $180.4M, a beta of 0.79 versus the broader market, a 52-week range of 1.98-17.68, average daily share volume of 1.3M, a public-listing history dating back to 1980, approximately 255 full-time employees. These structural characteristics shape how ELME stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.79 places ELME roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ELME pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on ELME?
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 ELME snapshot
As of May 15, 2026, spot at $2.01, ATM IV 346.70%, IV rank 86.44%, expected move 99.40%. The butterfly on ELME 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 ELME specifically: ELME IV at 346.70% is rich versus its 1-year range, which makes a premium-buying ELME butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 99.40% (roughly $2.00 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 ELME expiries trade a higher absolute premium for lower per-day decay. Position sizing on ELME should anchor to the underlying notional of $2.01 per share and to the trader's directional view on ELME stock.
ELME butterfly setup
The ELME 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 ELME near $2.01, the first option leg uses a $1.91 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ELME 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 ELME shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $1.91 | N/A |
| Sell 2 | Call | $2.01 | N/A |
| Buy 1 | Call | $2.11 | N/A |
ELME 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.
ELME butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ELME. 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 ELME
Butterflies on ELME are pinning bets - traders use them when they expect ELME 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.
ELME thesis for this butterfly
The market-implied 1-standard-deviation range for ELME extends from approximately $0.01 on the downside to $4.01 on the upside. A ELME long call butterfly is a pinning play: it pays maximum at the middle strike if ELME settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ELME IV rank near 86.44% 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 ELME at 346.70%. As a Real Estate name, ELME options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ELME-specific events.
ELME 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. ELME positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ELME alongside the broader basket even when ELME-specific fundamentals are unchanged. Always rebuild the position from current ELME chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ELME?
- A butterfly on ELME is the butterfly strategy applied to ELME (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 ELME stock trading near $2.01, the strikes shown on this page are snapped to the nearest listed ELME chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ELME 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 ELME butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 346.70%), 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 ELME butterfly?
- The breakeven for the ELME 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 ELME market-implied 1-standard-deviation expected move is approximately 99.40%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ELME?
- Butterflies on ELME are pinning bets - traders use them when they expect ELME 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 ELME implied volatility affect this butterfly?
- ELME ATM IV is at 346.70% with IV rank near 86.44%, 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.