FRMI Butterfly Strategy
FRMI (Fermi Inc. Common Stock), in the Utilities sector, (Regulated Electric industry), listed on NASDAQ.
Fermi, Inc. engages in the development of energy infrastructure. It intends to develop an energy and data center development campus to support the needs of to-be-built AI infrastructure. The company was founded by Rick Perry, Toby Neugebauer and Griffin Perry on January 10, 2025 and is headquartered in Amrillo, TX.
FRMI (Fermi Inc. Common Stock) trades in the Utilities sector, specifically Regulated Electric, with a market capitalization of approximately $3.83B, a beta of 1.51 versus the broader market, a 52-week range of 4.47-36.99, average daily share volume of 13.3M, a public-listing history dating back to 2025, approximately 1 full-time employees. These structural characteristics shape how FRMI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.51 indicates FRMI has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a butterfly on FRMI?
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 FRMI snapshot
As of May 15, 2026, spot at $6.49, ATM IV 126.42%, IV rank 4.45%, expected move 36.25%. The butterfly on FRMI 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 FRMI specifically: FRMI IV at 126.42% is on the cheap side of its 1-year range, which favors premium-buying structures like a FRMI butterfly, with a market-implied 1-standard-deviation move of approximately 36.25% (roughly $2.35 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 FRMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on FRMI should anchor to the underlying notional of $6.49 per share and to the trader's directional view on FRMI stock.
FRMI butterfly setup
The FRMI 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 FRMI near $6.49, the first option leg uses a $6.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FRMI 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 FRMI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $6.00 | $1.23 |
| Sell 2 | Call | $6.50 | $0.88 |
| Buy 1 | Call | $7.00 | $0.70 |
FRMI butterfly risk and reward
- Net Premium / Debit
- -$17.50
- Max Profit (per contract)
- $29.74
- Max Loss (per contract)
- -$17.50
- Breakeven(s)
- $6.18
- Risk / Reward Ratio
- 1.699
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.
FRMI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on FRMI. 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 | -99.8% | -$17.50 |
| $1.44 | -77.8% | -$17.50 |
| $2.88 | -55.7% | -$17.50 |
| $4.31 | -33.6% | -$17.50 |
| $5.75 | -11.5% | -$17.50 |
| $7.18 | +10.6% | -$17.50 |
| $8.61 | +32.7% | -$17.50 |
| $10.05 | +54.8% | -$17.50 |
| $11.48 | +76.9% | -$17.50 |
| $12.91 | +99.0% | -$17.50 |
When traders use butterfly on FRMI
Butterflies on FRMI are pinning bets - traders use them when they expect FRMI 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.
FRMI thesis for this butterfly
The market-implied 1-standard-deviation range for FRMI extends from approximately $4.14 on the downside to $8.84 on the upside. A FRMI long call butterfly is a pinning play: it pays maximum at the middle strike if FRMI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current FRMI IV rank near 4.45% 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 FRMI at 126.42%. As a Utilities name, FRMI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FRMI-specific events.
FRMI 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. FRMI positions also carry Utilities sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FRMI alongside the broader basket even when FRMI-specific fundamentals are unchanged. Always rebuild the position from current FRMI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on FRMI?
- A butterfly on FRMI is the butterfly strategy applied to FRMI (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 FRMI stock trading near $6.49, the strikes shown on this page are snapped to the nearest listed FRMI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FRMI 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 FRMI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 126.42%), the computed maximum profit is $29.74 per contract and the computed maximum loss is -$17.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FRMI butterfly?
- The breakeven for the FRMI butterfly priced on this page is roughly $6.18 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 FRMI market-implied 1-standard-deviation expected move is approximately 36.25%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on FRMI?
- Butterflies on FRMI are pinning bets - traders use them when they expect FRMI 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 FRMI implied volatility affect this butterfly?
- FRMI ATM IV is at 126.42% with IV rank near 4.45%, 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.