HLIT Butterfly Strategy
HLIT (Harmonic Inc.), in the Technology sector, (Communication Equipment industry), listed on NASDAQ.
Harmonic Inc., together with its subsidiaries, provide video delivery software, products, system solutions, and services worldwide. The company operates in two segments, Video and Cable Access. The Video segment sells video processing, production, and playout solutions and services to cable operators, and satellite and telecommunications Pay-TV service providers, as well as to broadcast and media, including streaming media companies. This segment's video processing appliance solutions include network management and application software, and hardware products, such as encoders, video servers, high-density stream processing systems, and edge processors. This segment also provides software-as-a-service (SaaS) solutions, which enables the packaging and delivery of streaming services, including live streaming, video-on-demand, catch-up TV, start-over TV, network-DVR, and cloud-DVR services through HTTP streaming to various device along with dynamic and personal ad insertion. The Cable Access segment offers CableOS software-based cable access solutions; and CableOS central cloud services primarily to cable operators.
HLIT (Harmonic Inc.) trades in the Technology sector, specifically Communication Equipment, with a market capitalization of approximately $1.47B, a beta of 1.24 versus the broader market, a 52-week range of 7.8-15.39, average daily share volume of 1.4M, a public-listing history dating back to 1995, approximately 901 full-time employees. These structural characteristics shape how HLIT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.24 places HLIT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on HLIT?
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 HLIT snapshot
As of May 15, 2026, spot at $12.46, ATM IV 58.20%, IV rank 22.45%, expected move 16.69%. The butterfly on HLIT 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 HLIT specifically: HLIT IV at 58.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a HLIT butterfly, with a market-implied 1-standard-deviation move of approximately 16.69% (roughly $2.08 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 HLIT expiries trade a higher absolute premium for lower per-day decay. Position sizing on HLIT should anchor to the underlying notional of $12.46 per share and to the trader's directional view on HLIT stock.
HLIT butterfly setup
The HLIT 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 HLIT near $12.46, the first option leg uses a $11.84 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HLIT 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 HLIT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $11.84 | N/A |
| Sell 2 | Call | $12.46 | N/A |
| Buy 1 | Call | $13.08 | N/A |
HLIT 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.
HLIT butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on HLIT. 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 HLIT
Butterflies on HLIT are pinning bets - traders use them when they expect HLIT 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.
HLIT thesis for this butterfly
The market-implied 1-standard-deviation range for HLIT extends from approximately $10.38 on the downside to $14.54 on the upside. A HLIT long call butterfly is a pinning play: it pays maximum at the middle strike if HLIT settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current HLIT IV rank near 22.45% 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 HLIT at 58.20%. As a Technology name, HLIT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HLIT-specific events.
HLIT 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. HLIT positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HLIT alongside the broader basket even when HLIT-specific fundamentals are unchanged. Always rebuild the position from current HLIT chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on HLIT?
- A butterfly on HLIT is the butterfly strategy applied to HLIT (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 HLIT stock trading near $12.46, the strikes shown on this page are snapped to the nearest listed HLIT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HLIT 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 HLIT butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 58.20%), 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 HLIT butterfly?
- The breakeven for the HLIT 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 HLIT market-implied 1-standard-deviation expected move is approximately 16.69%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on HLIT?
- Butterflies on HLIT are pinning bets - traders use them when they expect HLIT 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 HLIT implied volatility affect this butterfly?
- HLIT ATM IV is at 58.20% with IV rank near 22.45%, 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.