GHM Butterfly Strategy
GHM (Graham Corporation), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Graham Corporation, founded in 1936 and based in Batavia, New York, is an engineering and manufacturing company that, along with its subsidiaries, specializes in creating advanced fluid, power, heat transfer, and vacuum equipment. This specialized machinery serves a broad spectrum of critical industries, including chemical and petrochemical processing, defense, aerospace, petroleum refining, cryogenic applications, and energy. The company's diverse product range includes: Power Generation Solutions: Such as ejectors and surface condensers for power plants, as well as turbines, generators, compressors, and pumps. Defense and Space Technologies: Providing torpedo ejection and power systems that integrate turbines, alternators, regulators, pumps, and blowers; also supplying rocket propulsion systems like turbopumps and fuel pumps. Thermal Management and Life Support Systems: Offering pumps, blowers, and electronics for thermal control, cooling systems featuring pumps, compressors, fans, and blowers, and life support equipment comprising fans, pumps, and blowers. Heat Transfer and Vacuum Equipment: Including ejectors, process and surface condensers, liquid ring pumps, heat exchangers, nozzles, and turbomachinery products.
GHM (Graham Corporation) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $1.32B, a trailing P/E of 111.00, a beta of 1.07 versus the broader market, a 52-week range of 46.58-125.82, average daily share volume of 234K, a public-listing history dating back to 1980, approximately 732 full-time employees. These structural characteristics shape how GHM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.07 places GHM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 111.00 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. GHM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on GHM?
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.
GHM snapshot
As of August 14, 2026, spot at $112.53, ATM IV 50.40%, IV rank 11.83%, expected move 14.45%. The butterfly on GHM below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.
Why this butterfly structure on GHM specifically: GHM IV at 50.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a GHM butterfly, with a market-implied 1-standard-deviation move of approximately 14.45% (roughly $16.26 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated GHM expiries trade a higher absolute premium for lower per-day decay. Position sizing on GHM should anchor to the underlying notional of $112.53 per share and to the trader's directional view on GHM stock.
GHM butterfly setup
The GHM butterfly below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With GHM at $112.53 on that close, the first option leg uses a $105.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed GHM chain at a 35-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 GHM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $105.00 | $11.40 |
| Sell 2 | Call | $115.00 | $6.15 |
| Buy 1 | Call | $120.00 | $4.03 |
GHM butterfly risk and reward
- Net Premium / Debit
- -$312.50
- Max Profit (per contract)
- $651.27
- Max Loss (per contract)
- -$312.50
- Breakeven(s)
- $108.13
- Risk / Reward Ratio
- 2.084
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.
GHM butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on GHM. 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% | -$312.50 |
| $24.89 | -77.9% | -$312.50 |
| $49.77 | -55.8% | -$312.50 |
| $74.65 | -33.7% | -$312.50 |
| $99.53 | -11.6% | -$312.50 |
| $124.41 | +10.6% | +$187.50 |
| $149.29 | +32.7% | +$187.50 |
| $174.17 | +54.8% | +$187.50 |
| $199.05 | +76.9% | +$187.50 |
| $223.93 | +99.0% | +$187.50 |
When traders use butterfly on GHM
Butterflies on GHM are pinning bets - traders use them when they expect GHM 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.
GHM thesis for this butterfly
The market-implied 1-standard-deviation range for GHM extends from approximately $96.27 on the downside to $128.79 on the upside. A GHM long call butterfly is a pinning play: it pays maximum at the middle strike if GHM settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current GHM IV rank near 11.83% 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 GHM at 50.40%. As a Industrials name, GHM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to GHM-specific events.
GHM 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. GHM positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move GHM alongside the broader basket even when GHM-specific fundamentals are unchanged. Always rebuild the position from current GHM chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on GHM?
- A butterfly on GHM is the butterfly strategy applied to GHM (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 GHM stock at $112.53 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed GHM chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are GHM 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 GHM butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 50.40%), the computed maximum profit is $651.27 per contract and the computed maximum loss is -$312.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a GHM butterfly?
- The breakeven for the GHM butterfly priced on this page is roughly $108.13 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The GHM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 14.45%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on GHM?
- Butterflies on GHM are pinning bets - traders use them when they expect GHM 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 GHM implied volatility affect this butterfly?
- GHM ATM IV is at 50.40% with IV rank near 11.83%, 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.