HCC Butterfly Strategy
HCC (Warrior Met Coal, Inc.), in the Energy sector, (Coal industry), listed on NYSE.
Warrior Met Coal, Inc. specializes in the extraction and international distribution of coking coal, a critical raw material for steel production. The firm operates a pair of underground mines situated in Alabama. Its primary client base consists of blast furnace steel producers, predominantly located across Europe, South America, and Asia. In addition to coal, the company also sells natural gas, which is recovered as a byproduct of its mining activities. Established as a corporation in 2015, Warrior Met Coal, Inc. maintains its headquarters in Brookwood, Alabama.
HCC (Warrior Met Coal, Inc.) trades in the Energy sector, specifically Coal, with a market capitalization of approximately $5.19B, a trailing P/E of 23.65, a beta of 0.67 versus the broader market, a 52-week range of 54.66-110.39, average daily share volume of 815K, a public-listing history dating back to 2017, approximately 1K full-time employees. These structural characteristics shape how HCC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.67 indicates HCC has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HCC pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on HCC?
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.
HCC snapshot
As of August 14, 2026, spot at $98.74, ATM IV 44.40%, IV rank 16.68%, expected move 12.73%. The butterfly on HCC 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 HCC specifically: HCC IV at 44.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a HCC butterfly, with a market-implied 1-standard-deviation move of approximately 12.73% (roughly $12.57 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 HCC expiries trade a higher absolute premium for lower per-day decay. Position sizing on HCC should anchor to the underlying notional of $98.74 per share and to the trader's directional view on HCC stock.
HCC butterfly setup
The HCC 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 HCC at $98.74 on that close, the first option leg uses a $95.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HCC 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 HCC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $95.00 | $7.60 |
| Sell 2 | Call | $100.00 | $4.90 |
| Buy 1 | Call | $105.00 | $3.08 |
HCC butterfly risk and reward
- Net Premium / Debit
- -$87.50
- Max Profit (per contract)
- $389.15
- Max Loss (per contract)
- -$87.50
- Breakeven(s)
- $95.88, $104.13
- Risk / Reward Ratio
- 4.447
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.
HCC butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on HCC. 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% | -$87.50 |
| $21.84 | -77.9% | -$87.50 |
| $43.67 | -55.8% | -$87.50 |
| $65.50 | -33.7% | -$87.50 |
| $87.33 | -11.6% | -$87.50 |
| $109.16 | +10.6% | -$87.50 |
| $131.00 | +32.7% | -$87.50 |
| $152.83 | +54.8% | -$87.50 |
| $174.66 | +76.9% | -$87.50 |
| $196.49 | +99.0% | -$87.50 |
When traders use butterfly on HCC
Butterflies on HCC are pinning bets - traders use them when they expect HCC 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.
HCC thesis for this butterfly
The market-implied 1-standard-deviation range for HCC extends from approximately $86.17 on the downside to $111.31 on the upside. A HCC long call butterfly is a pinning play: it pays maximum at the middle strike if HCC settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current HCC IV rank near 16.68% 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 HCC at 44.40%. As a Energy name, HCC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HCC-specific events.
HCC 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. HCC positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HCC alongside the broader basket even when HCC-specific fundamentals are unchanged. Always rebuild the position from current HCC chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on HCC?
- A butterfly on HCC is the butterfly strategy applied to HCC (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 HCC stock at $98.74 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed HCC chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are HCC 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 HCC butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 44.40%), the computed maximum profit is $389.15 per contract and the computed maximum loss is -$87.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HCC butterfly?
- The breakeven for the HCC butterfly priced on this page is roughly $95.88 and $104.13 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 HCC market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.73%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on HCC?
- Butterflies on HCC are pinning bets - traders use them when they expect HCC 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 HCC implied volatility affect this butterfly?
- HCC ATM IV is at 44.40% with IV rank near 16.68%, 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.