How are HRL 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 HRL butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 35.98%), the computed maximum profit is $73.25 per contract and the computed maximum loss is -$22.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a HRL butterfly?

The breakeven for the HRL butterfly priced on this page is roughly $19.23 and $20.78 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 HRL market-implied 1-standard-deviation expected move is approximately 10.31%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current HRL implied volatility affect this butterfly?

HRL ATM IV is at 35.98% with IV rank near 54.76%, 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.

HRL Butterfly Strategy

HRL (Hormel Foods Corporation), in the Consumer Defensive sector, (Packaged Foods industry), listed on NYSE.

Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. It provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chilies, shelf-stable microwaveable meals, hashes, stews, tortillas, salsas, tortilla chips, and others. The company also engages in the processing, marketing, and sale of branded and unbranded pork, beef, poultry, and turkey products, as well as offers nutritional food products and supplements, desserts and drink mixes, and industrial gelatin products. It sells its products primarily under the SKIPPY, SPAM, Hormel, Natural Choice, Applegate, Justin's, Jennie-O, Café H, Herdez, Black Label, Sadler's, Columbus, Gatherings, Herdez, Wholly, Columbus, Planters, NUT-rition, Planters Cheez Balls, Corn Nuts, etc. brand names through sales personnel, independent brokers, and distributors. The company was formerly known as Geo.

HRL (Hormel Foods Corporation) trades in the Consumer Defensive sector, specifically Packaged Foods, with a market capitalization of approximately $10.96B, a trailing P/E of 22.40, a beta of 0.31 versus the broader market, a 52-week range of 19.81-31.86, average daily share volume of 4.8M, a public-listing history dating back to 1980, approximately 20K full-time employees. These structural characteristics shape how HRL stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.31 indicates HRL has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HRL pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on HRL?

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 HRL snapshot

As of May 15, 2026, spot at $19.74, ATM IV 35.98%, IV rank 54.76%, expected move 10.31%. The butterfly on HRL 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 HRL specifically: HRL IV at 35.98% 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 10.31% (roughly $2.04 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 HRL expiries trade a higher absolute premium for lower per-day decay. Position sizing on HRL should anchor to the underlying notional of $19.74 per share and to the trader's directional view on HRL stock.

HRL butterfly setup

The HRL 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 HRL near $19.74, the first option leg uses a $19.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HRL 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 HRL shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$19.00	$1.33
Sell 2	Call	$20.00	$0.73
Buy 1	Call	$21.00	$0.35

HRL butterfly risk and reward

Net Premium / Debit: -$22.50
Max Profit (per contract): $73.25
Max Loss (per contract): -$22.50
Breakeven(s): $19.23, $20.78
Risk / Reward Ratio: 3.255

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.

HRL butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on HRL. 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	-99.9%	-$22.50
$4.37	-77.8%	-$22.50
$8.74	-55.7%	-$22.50
$13.10	-33.6%	-$22.50
$17.46	-11.5%	-$22.50
$21.83	+10.6%	-$22.50
$26.19	+32.7%	-$22.50
$30.55	+54.8%	-$22.50
$34.92	+76.9%	-$22.50
$39.28	+99.0%	-$22.50

When traders use butterfly on HRL

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

HRL thesis for this butterfly

The market-implied 1-standard-deviation range for HRL extends from approximately $17.70 on the downside to $21.78 on the upside. A HRL long call butterfly is a pinning play: it pays maximum at the middle strike if HRL settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current HRL IV rank near 54.76% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on HRL should anchor more to the directional view and the expected-move geometry. As a Consumer Defensive name, HRL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HRL-specific events.

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

Frequently asked questions

What is a butterfly on HRL?: A butterfly on HRL is the butterfly strategy applied to HRL (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 HRL stock trading near $19.74, the strikes shown on this page are snapped to the nearest listed HRL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are HRL 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 HRL butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 35.98%), the computed maximum profit is $73.25 per contract and the computed maximum loss is -$22.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a HRL butterfly?: The breakeven for the HRL butterfly priced on this page is roughly $19.23 and $20.78 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 HRL market-implied 1-standard-deviation expected move is approximately 10.31%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on HRL?: Butterflies on HRL are pinning bets - traders use them when they expect HRL 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 HRL implied volatility affect this butterfly?: HRL ATM IV is at 35.98% with IV rank near 54.76%, 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.