INSM Butterfly Strategy
INSM (Insmed Incorporated), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Insmed Incorporated, a biopharmaceutical company, develops and commercializes therapies for patients with serious and rare diseases. The company offers ARIKAYCE for the treatment of Mycobacterium avium complex lung disease as part of a combination antibacterial drug regimen for adult patients. It is also developing Brensocatib, an oral reversible inhibitor of dipeptidyl peptidase 1 for the treatment of patients with bronchiectasis and other neutrophil-mediated diseases; and Treprostinil Palmitil Inhalation Powder, an inhaled formulation of a treprostinil prodrug treprostinil palmitil for the treatment of pulmonary arterial hypertension and other rare pulmonary disorders. Insmed Incorporated was founded in 1988 and is headquartered in Bridgewater, New Jersey.
INSM (Insmed Incorporated) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $25.57B, a beta of 0.89 versus the broader market, a 52-week range of 64.85-212.75, average daily share volume of 2.6M, a public-listing history dating back to 2000, approximately 1K full-time employees. These structural characteristics shape how INSM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.89 places INSM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on INSM?
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 INSM snapshot
As of May 15, 2026, spot at $109.73, ATM IV 48.90%, IV rank 27.06%, expected move 14.02%. The butterfly on INSM 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 INSM specifically: INSM IV at 48.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a INSM butterfly, with a market-implied 1-standard-deviation move of approximately 14.02% (roughly $15.38 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 INSM expiries trade a higher absolute premium for lower per-day decay. Position sizing on INSM should anchor to the underlying notional of $109.73 per share and to the trader's directional view on INSM stock.
INSM butterfly setup
The INSM 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 INSM near $109.73, the first option leg uses a $105.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed INSM 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 INSM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $105.00 | $9.30 |
| Sell 2 | Call | $110.00 | $6.65 |
| Buy 1 | Call | $115.00 | $4.55 |
INSM butterfly risk and reward
- Net Premium / Debit
- -$55.00
- Max Profit (per contract)
- $416.36
- Max Loss (per contract)
- -$55.00
- Breakeven(s)
- $105.47, $114.45
- Risk / Reward Ratio
- 7.570
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.
INSM butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on INSM. 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% | -$55.00 |
| $24.27 | -77.9% | -$55.00 |
| $48.53 | -55.8% | -$55.00 |
| $72.79 | -33.7% | -$55.00 |
| $97.05 | -11.6% | -$55.00 |
| $121.31 | +10.6% | -$55.00 |
| $145.57 | +32.7% | -$55.00 |
| $169.84 | +54.8% | -$55.00 |
| $194.10 | +76.9% | -$55.00 |
| $218.36 | +99.0% | -$55.00 |
When traders use butterfly on INSM
Butterflies on INSM are pinning bets - traders use them when they expect INSM 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.
INSM thesis for this butterfly
The market-implied 1-standard-deviation range for INSM extends from approximately $94.35 on the downside to $125.11 on the upside. A INSM long call butterfly is a pinning play: it pays maximum at the middle strike if INSM settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current INSM IV rank near 27.06% 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 INSM at 48.90%. As a Healthcare name, INSM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to INSM-specific events.
INSM 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. INSM positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move INSM alongside the broader basket even when INSM-specific fundamentals are unchanged. Always rebuild the position from current INSM chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on INSM?
- A butterfly on INSM is the butterfly strategy applied to INSM (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 INSM stock trading near $109.73, the strikes shown on this page are snapped to the nearest listed INSM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are INSM 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 INSM butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 48.90%), the computed maximum profit is $416.36 per contract and the computed maximum loss is -$55.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a INSM butterfly?
- The breakeven for the INSM butterfly priced on this page is roughly $105.47 and $114.45 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 INSM market-implied 1-standard-deviation expected move is approximately 14.02%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on INSM?
- Butterflies on INSM are pinning bets - traders use them when they expect INSM 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 INSM implied volatility affect this butterfly?
- INSM ATM IV is at 48.90% with IV rank near 27.06%, 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.