ILMN Butterfly Strategy
ILMN (Illumina, Inc.), in the Healthcare sector, (Medical - Diagnostics & Research industry), listed on NASDAQ.
Illumina, Inc. provides sequencing and array-based solutions for genetic and genomic analysis. Its products and services serve customers in a range of markets enabling the adoption of genomic solutions in research and clinical settings for applications in the life sciences, oncology, reproductive health, agriculture, and other emerging segments. The company provides instruments and consumables used in genetic analysis; and genotyping and sequencing services, instrument service contracts, and development and licensing agreements, as well as cancer detection testing services. Its customers include genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. The company markets and distributes its products directly to customers in North America, Europe, Latin America, and the Asia-Pacific region, as well as sells through life-science distributors in various markets within Europe, the Asia-Pacific region, Latin America, the Middle East, and Africa. The company was incorporated in 1998 and is based in San Diego, California.
ILMN (Illumina, Inc.) trades in the Healthcare sector, specifically Medical - Diagnostics & Research, with a market capitalization of approximately $21.94B, a trailing P/E of 26.01, a beta of 1.42 versus the broader market, a 52-week range of 78.55-155.53, average daily share volume of 1.8M, a public-listing history dating back to 2000, approximately 9K full-time employees. These structural characteristics shape how ILMN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.42 indicates ILMN has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a butterfly on ILMN?
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 ILMN snapshot
As of May 15, 2026, spot at $143.19, ATM IV 41.70%, IV rank 15.96%, expected move 11.96%. The butterfly on ILMN 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 ILMN specifically: ILMN IV at 41.70% is on the cheap side of its 1-year range, which favors premium-buying structures like a ILMN butterfly, with a market-implied 1-standard-deviation move of approximately 11.96% (roughly $17.12 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 ILMN expiries trade a higher absolute premium for lower per-day decay. Position sizing on ILMN should anchor to the underlying notional of $143.19 per share and to the trader's directional view on ILMN stock.
ILMN butterfly setup
The ILMN 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 ILMN near $143.19, the first option leg uses a $135.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ILMN 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 ILMN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $135.00 | $12.10 |
| Sell 2 | Call | $145.00 | $6.85 |
| Buy 1 | Call | $150.00 | $4.85 |
ILMN butterfly risk and reward
- Net Premium / Debit
- -$325.00
- Max Profit (per contract)
- $639.64
- Max Loss (per contract)
- -$325.00
- Breakeven(s)
- $138.25
- Risk / Reward Ratio
- 1.968
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.
ILMN butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ILMN. 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% | -$325.00 |
| $31.67 | -77.9% | -$325.00 |
| $63.33 | -55.8% | -$325.00 |
| $94.99 | -33.7% | -$325.00 |
| $126.65 | -11.6% | -$325.00 |
| $158.30 | +10.6% | +$175.00 |
| $189.96 | +32.7% | +$175.00 |
| $221.62 | +54.8% | +$175.00 |
| $253.28 | +76.9% | +$175.00 |
| $284.94 | +99.0% | +$175.00 |
When traders use butterfly on ILMN
Butterflies on ILMN are pinning bets - traders use them when they expect ILMN 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.
ILMN thesis for this butterfly
The market-implied 1-standard-deviation range for ILMN extends from approximately $126.07 on the downside to $160.31 on the upside. A ILMN long call butterfly is a pinning play: it pays maximum at the middle strike if ILMN settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ILMN IV rank near 15.96% 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 ILMN at 41.70%. As a Healthcare name, ILMN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ILMN-specific events.
ILMN 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. ILMN positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ILMN alongside the broader basket even when ILMN-specific fundamentals are unchanged. Always rebuild the position from current ILMN chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ILMN?
- A butterfly on ILMN is the butterfly strategy applied to ILMN (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 ILMN stock trading near $143.19, the strikes shown on this page are snapped to the nearest listed ILMN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ILMN 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 ILMN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 41.70%), the computed maximum profit is $639.64 per contract and the computed maximum loss is -$325.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ILMN butterfly?
- The breakeven for the ILMN butterfly priced on this page is roughly $138.25 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 ILMN market-implied 1-standard-deviation expected move is approximately 11.96%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ILMN?
- Butterflies on ILMN are pinning bets - traders use them when they expect ILMN 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 ILMN implied volatility affect this butterfly?
- ILMN ATM IV is at 41.70% with IV rank near 15.96%, 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.