FPI Butterfly Strategy
FPI (Farmland Partners Inc.), in the Real Estate sector, (REIT - Specialty industry), listed on NYSE.
Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owns approximately 155,000 acres in 16 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, South Dakota and Virginia. We have approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.
FPI (Farmland Partners Inc.) trades in the Real Estate sector, specifically REIT - Specialty, with a market capitalization of approximately $453.6M, a trailing P/E of 14.90, a beta of 0.71 versus the broader market, a 52-week range of 9.365-13.225, average daily share volume of 518K, a public-listing history dating back to 2014, approximately 23 full-time employees. These structural characteristics shape how FPI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.71 places FPI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FPI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on FPI?
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 FPI snapshot
As of May 15, 2026, spot at $10.16, ATM IV 31.80%, IV rank 6.96%, expected move 9.12%. The butterfly on FPI 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 FPI specifically: FPI IV at 31.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a FPI butterfly, with a market-implied 1-standard-deviation move of approximately 9.12% (roughly $0.93 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 FPI expiries trade a higher absolute premium for lower per-day decay. Position sizing on FPI should anchor to the underlying notional of $10.16 per share and to the trader's directional view on FPI stock.
FPI butterfly setup
The FPI 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 FPI near $10.16, the first option leg uses a $9.65 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FPI 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 FPI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $9.65 | N/A |
| Sell 2 | Call | $10.16 | N/A |
| Buy 1 | Call | $10.67 | N/A |
FPI 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.
FPI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on FPI. 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 FPI
Butterflies on FPI are pinning bets - traders use them when they expect FPI 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.
FPI thesis for this butterfly
The market-implied 1-standard-deviation range for FPI extends from approximately $9.23 on the downside to $11.09 on the upside. A FPI long call butterfly is a pinning play: it pays maximum at the middle strike if FPI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current FPI IV rank near 6.96% 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 FPI at 31.80%. As a Real Estate name, FPI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FPI-specific events.
FPI 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. FPI positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FPI alongside the broader basket even when FPI-specific fundamentals are unchanged. Always rebuild the position from current FPI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on FPI?
- A butterfly on FPI is the butterfly strategy applied to FPI (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 FPI stock trading near $10.16, the strikes shown on this page are snapped to the nearest listed FPI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FPI 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 FPI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 31.80%), 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 FPI butterfly?
- The breakeven for the FPI 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 FPI market-implied 1-standard-deviation expected move is approximately 9.12%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on FPI?
- Butterflies on FPI are pinning bets - traders use them when they expect FPI 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 FPI implied volatility affect this butterfly?
- FPI ATM IV is at 31.80% with IV rank near 6.96%, 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.