INCY Butterfly Strategy
INCY (Incyte Corporation), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Incyte Corporation is a biopharmaceutical firm engaged in the research, development, and global marketing of its own innovative therapies. Its current product offerings include JAKAFI, prescribed for myelofibrosis and polycythemia vera; PEMAZYRE, a fibroblast growth factor receptor kinase inhibitor that targets oncogenic drivers in various liquid and solid tumor types; and ICLUSIG, a kinase inhibitor utilized for chronic myeloid leukemia and Philadelphia-chromosome positive acute lymphoblastic leukemia. Beyond its marketed drugs, Incyte's pipeline features several promising candidates. Among its clinical-stage assets are ruxolitinib, targeting steroid-refractory chronic graft-versus-host disease (GVHD), and itacitinib, which is undergoing Phase II/III trials for newly diagnosed chronic GVHD. Pemigatinib is also being investigated for conditions such as bladder cancer, cholangiocarcinoma, myeloproliferative syndrome, and other tumor types. Further advancing its research, the company is developing Parsaclisib, currently in Phase II studies for follicular lymphoma, marginal zone lymphoma, and mantle cell lymphoma.
INCY (Incyte Corporation) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $24.48B, a trailing P/E of 15.01, a beta of 0.77 versus the broader market, a 52-week range of 81.09-132.6, average daily share volume of 1.7M, a public-listing history dating back to 1993, approximately 3K full-time employees. These structural characteristics shape how INCY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.77 places INCY roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on INCY?
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.
INCY snapshot
As of August 14, 2026, spot at $120.25, ATM IV 31.90%, IV rank 10.02%, expected move 9.15%. The butterfly on INCY 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 INCY specifically: INCY IV at 31.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a INCY butterfly, with a market-implied 1-standard-deviation move of approximately 9.15% (roughly $11.00 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 INCY expiries trade a higher absolute premium for lower per-day decay. Position sizing on INCY should anchor to the underlying notional of $120.25 per share and to the trader's directional view on INCY stock.
INCY butterfly setup
The INCY 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 INCY at $120.25 on that close, the first option leg uses a $115.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed INCY 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 INCY shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $115.00 | $7.85 |
| Sell 2 | Call | $120.00 | $4.60 |
| Buy 1 | Call | $125.00 | $2.65 |
INCY butterfly risk and reward
- Net Premium / Debit
- -$130.00
- Max Profit (per contract)
- $335.08
- Max Loss (per contract)
- -$130.00
- Breakeven(s)
- $116.30, $123.70
- Risk / Reward Ratio
- 2.578
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.
INCY butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on INCY. 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% | -$130.00 |
| $26.60 | -77.9% | -$130.00 |
| $53.18 | -55.8% | -$130.00 |
| $79.77 | -33.7% | -$130.00 |
| $106.36 | -11.6% | -$130.00 |
| $132.94 | +10.6% | -$130.00 |
| $159.53 | +32.7% | -$130.00 |
| $186.12 | +54.8% | -$130.00 |
| $212.70 | +76.9% | -$130.00 |
| $239.29 | +99.0% | -$130.00 |
When traders use butterfly on INCY
Butterflies on INCY are pinning bets - traders use them when they expect INCY 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.
INCY thesis for this butterfly
The market-implied 1-standard-deviation range for INCY extends from approximately $109.25 on the downside to $131.25 on the upside. A INCY long call butterfly is a pinning play: it pays maximum at the middle strike if INCY settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current INCY IV rank near 10.02% 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 INCY at 31.90%. As a Healthcare name, INCY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to INCY-specific events.
INCY 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. INCY positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move INCY alongside the broader basket even when INCY-specific fundamentals are unchanged. Always rebuild the position from current INCY chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on INCY?
- A butterfly on INCY is the butterfly strategy applied to INCY (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 INCY stock at $120.25 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed INCY chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are INCY 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 INCY butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 31.90%), the computed maximum profit is $335.08 per contract and the computed maximum loss is -$130.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a INCY butterfly?
- The breakeven for the INCY butterfly priced on this page is roughly $116.30 and $123.70 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 INCY market-implied 1-standard-deviation expected move in the same options snapshot is approximately 9.15%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on INCY?
- Butterflies on INCY are pinning bets - traders use them when they expect INCY 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 INCY implied volatility affect this butterfly?
- INCY ATM IV is at 31.90% with IV rank near 10.02%, 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.