IRON Butterfly Strategy
IRON (Disc Medicine, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Based in Watertown, Massachusetts, Disc Medicine, Inc. operates as a clinical-stage biotechnology company. Its core mission involves the discovery, development, and commercialization of novel therapeutic solutions for individuals suffering from serious hematological diseases. The company is actively constructing a pipeline of drug candidates, designed to address a variety of these conditions by precisely targeting fundamental biological mechanisms related to red blood cell biology, particularly heme biosynthesis and iron homeostasis.
IRON (Disc Medicine, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $3.09B, a beta of 2.06 versus the broader market, a 52-week range of 40-99.5, average daily share volume of 510K, a public-listing history dating back to 2020, approximately 165 full-time employees. These structural characteristics shape how IRON stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.06 indicates IRON 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 IRON?
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.
IRON snapshot
As of August 14, 2026, spot at $79.06, ATM IV 43.80%, IV rank 10.14%, expected move 12.56%. The butterfly on IRON 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 IRON specifically: IRON IV at 43.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a IRON butterfly, with a market-implied 1-standard-deviation move of approximately 12.56% (roughly $9.93 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 IRON expiries trade a higher absolute premium for lower per-day decay. Position sizing on IRON should anchor to the underlying notional of $79.06 per share and to the trader's directional view on IRON stock.
IRON butterfly setup
The IRON 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 IRON at $79.06 on that close, the first option leg uses a $75.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed IRON 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 IRON shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $75.00 | $6.75 |
| Sell 2 | Call | $80.00 | $3.95 |
| Buy 1 | Call | $85.00 | $2.08 |
IRON butterfly risk and reward
- Net Premium / Debit
- -$92.50
- Max Profit (per contract)
- $381.82
- Max Loss (per contract)
- -$92.50
- Breakeven(s)
- $75.93, $84.08
- Risk / Reward Ratio
- 4.128
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.
IRON butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on IRON. 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% | -$92.50 |
| $17.49 | -77.9% | -$92.50 |
| $34.97 | -55.8% | -$92.50 |
| $52.45 | -33.7% | -$92.50 |
| $69.93 | -11.6% | -$92.50 |
| $87.41 | +10.6% | -$92.50 |
| $104.89 | +32.7% | -$92.50 |
| $122.37 | +54.8% | -$92.50 |
| $139.85 | +76.9% | -$92.50 |
| $157.33 | +99.0% | -$92.50 |
When traders use butterfly on IRON
Butterflies on IRON are pinning bets - traders use them when they expect IRON 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.
IRON thesis for this butterfly
The market-implied 1-standard-deviation range for IRON extends from approximately $69.13 on the downside to $88.99 on the upside. A IRON long call butterfly is a pinning play: it pays maximum at the middle strike if IRON settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current IRON IV rank near 10.14% 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 IRON at 43.80%. As a Healthcare name, IRON options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to IRON-specific events.
IRON 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. IRON positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move IRON alongside the broader basket even when IRON-specific fundamentals are unchanged. Always rebuild the position from current IRON chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on IRON?
- A butterfly on IRON is the butterfly strategy applied to IRON (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 IRON stock at $79.06 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed IRON chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are IRON 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 IRON butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 43.80%), the computed maximum profit is $381.82 per contract and the computed maximum loss is -$92.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a IRON butterfly?
- The breakeven for the IRON butterfly priced on this page is roughly $75.93 and $84.08 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 IRON market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.56%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on IRON?
- Butterflies on IRON are pinning bets - traders use them when they expect IRON 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 IRON implied volatility affect this butterfly?
- IRON ATM IV is at 43.80% with IV rank near 10.14%, 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.