How are ITW 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 ITW butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 21.30%), the computed maximum profit is $752.47 per contract and the computed maximum loss is -$240.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ITW butterfly?

The breakeven for the ITW butterfly priced on this page is roughly $242.40 and $257.60 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 ITW market-implied 1-standard-deviation expected move is approximately 6.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ITW implied volatility affect this butterfly?

ITW ATM IV is at 21.30% with IV rank near 35.94%, 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.

ITW Butterfly Strategy

ITW (Illinois Tool Works Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories.

ITW (Illinois Tool Works Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $71.95B, a trailing P/E of 23.01, a beta of 1.06 versus the broader market, a 52-week range of 238.82-303.16, average daily share volume of 1.4M, a public-listing history dating back to 1973, approximately 44K full-time employees. These structural characteristics shape how ITW stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.06 places ITW roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ITW pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on ITW?

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 ITW snapshot

As of May 15, 2026, spot at $248.82, ATM IV 21.30%, IV rank 35.94%, expected move 6.11%. The butterfly on ITW 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 ITW specifically: ITW IV at 21.30% 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 6.11% (roughly $15.19 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 ITW expiries trade a higher absolute premium for lower per-day decay. Position sizing on ITW should anchor to the underlying notional of $248.82 per share and to the trader's directional view on ITW stock.

ITW butterfly setup

The ITW 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 ITW near $248.82, the first option leg uses a $240.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ITW 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 ITW shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$240.00	$12.35
Sell 2	Call	$250.00	$6.20
Buy 1	Call	$260.00	$2.45

ITW butterfly risk and reward

Net Premium / Debit: -$240.00
Max Profit (per contract): $752.47
Max Loss (per contract): -$240.00
Breakeven(s): $242.40, $257.60
Risk / Reward Ratio: 3.135

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.

ITW butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on ITW. 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%	-$240.00
$55.02	-77.9%	-$240.00
$110.04	-55.8%	-$240.00
$165.05	-33.7%	-$240.00
$220.07	-11.6%	-$240.00
$275.08	+10.6%	-$240.00
$330.10	+32.7%	-$240.00
$385.11	+54.8%	-$240.00
$440.12	+76.9%	-$240.00
$495.14	+99.0%	-$240.00

When traders use butterfly on ITW

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

ITW thesis for this butterfly

The market-implied 1-standard-deviation range for ITW extends from approximately $233.63 on the downside to $264.01 on the upside. A ITW long call butterfly is a pinning play: it pays maximum at the middle strike if ITW settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ITW IV rank near 35.94% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on ITW should anchor more to the directional view and the expected-move geometry. As a Industrials name, ITW options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ITW-specific events.

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

Frequently asked questions

What is a butterfly on ITW?: A butterfly on ITW is the butterfly strategy applied to ITW (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 ITW stock trading near $248.82, the strikes shown on this page are snapped to the nearest listed ITW chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ITW 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 ITW butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 21.30%), the computed maximum profit is $752.47 per contract and the computed maximum loss is -$240.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ITW butterfly?: The breakeven for the ITW butterfly priced on this page is roughly $242.40 and $257.60 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 ITW market-implied 1-standard-deviation expected move is approximately 6.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on ITW?: Butterflies on ITW are pinning bets - traders use them when they expect ITW 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 ITW implied volatility affect this butterfly?: ITW ATM IV is at 21.30% with IV rank near 35.94%, 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.