How are HESM 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 HESM butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 18.30%), the computed maximum profit is $71.76 per contract and the computed maximum loss is -$115.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a HESM butterfly?

The breakeven for the HESM butterfly priced on this page is roughly $39.15 and $40.85 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 HESM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 5.25%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current HESM implied volatility affect this butterfly?

HESM ATM IV is at 18.30% with IV rank near 40.10%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.

HESM Butterfly Strategy

HESM (Hess Midstream LP), in the Energy sector, (Oil & Gas Midstream industry), listed on NYSE.

Hess Midstream LP specializes in the ownership, development, operation, and acquisition of energy infrastructure assets positioned midstream in the value chain. The company organizes its business activities into three distinct operational segments: Gathering, Processing and Storage, and Terminaling and Export. The Gathering segment manages systems for the collection and compression of natural gas, the transportation of crude oil, and the disposal of produced water. This extensive network comprises approximately 1,350 miles of pipelines designed for both high and low-pressure natural gas and natural gas liquids, with a daily capacity of about 450 million cubic feet. Additionally, it features around 550 miles of crude oil gathering pipelines. Within the Processing and Storage segment, key assets include the Tioga Gas Plant, located in Tioga, North Dakota, which performs natural gas processing and fractionation.

HESM (Hess Midstream LP) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $8.37B, a trailing P/E of 13.88, a beta of 0.50 versus the broader market, a 52-week range of 31.63-41.8, average daily share volume of 1.7M, a public-listing history dating back to 2017, approximately 195 full-time employees. These structural characteristics shape how HESM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.50 indicates HESM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HESM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on HESM?

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.

HESM snapshot

As of August 14, 2026, spot at $40.33, ATM IV 18.30%, IV rank 40.10%, expected move 5.25%. The butterfly on HESM 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 7-day expiry.

Why this butterfly structure on HESM specifically: HESM IV at 18.30% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 5.25% (roughly $2.12 on the underlying). The 7-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated HESM expiries trade a higher absolute premium for lower per-day decay. Position sizing on HESM should anchor to the underlying notional of $40.33 per share and to the trader's directional view on HESM stock.

HESM butterfly setup

The HESM 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 HESM at $40.33 on that close, the first option leg uses a $38.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HESM chain at a 7-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 HESM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$38.00	$2.30
Sell 2	Call	$40.00	$0.63
Buy 1	Call	$42.00	$0.10

HESM butterfly risk and reward

Net Premium / Debit: -$115.00
Max Profit (per contract): $71.76
Max Loss (per contract): -$115.00
Breakeven(s): $39.15, $40.85
Risk / Reward Ratio: 0.624

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.

HESM butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on HESM. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$115.00
$8.93	-77.9%	-$115.00
$17.84	-55.8%	-$115.00
$26.76	-33.7%	-$115.00
$35.67	-11.5%	-$115.00
$44.59	+10.6%	-$115.00
$53.51	+32.7%	-$115.00
$62.42	+54.8%	-$115.00
$71.34	+76.9%	-$115.00
$80.25	+99.0%	-$115.00

When traders use butterfly on HESM

Butterflies on HESM are pinning bets - traders use them when they expect HESM 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.

HESM thesis for this butterfly

The market-implied 1-standard-deviation range for HESM extends from approximately $38.21 on the downside to $42.45 on the upside. A HESM long call butterfly is a pinning play: it pays maximum at the middle strike if HESM settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current HESM IV rank near 40.10% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on HESM should anchor more to the directional view and the expected-move geometry. As a Energy name, HESM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HESM-specific events.

HESM 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. HESM positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HESM alongside the broader basket even when HESM-specific fundamentals are unchanged. Always rebuild the position from current HESM chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on HESM?: A butterfly on HESM is the butterfly strategy applied to HESM (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 HESM stock at $40.33 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed HESM chain strike and the premiums come straight from that session's bid/ask midpoint.
How are HESM 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 HESM butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 18.30%), the computed maximum profit is $71.76 per contract and the computed maximum loss is -$115.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a HESM butterfly?: The breakeven for the HESM butterfly priced on this page is roughly $39.15 and $40.85 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 HESM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 5.25%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on HESM?: Butterflies on HESM are pinning bets - traders use them when they expect HESM 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 HESM implied volatility affect this butterfly?: HESM ATM IV is at 18.30% with IV rank near 40.10%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.