How are KALU 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 KALU butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 38.90%), the computed maximum profit is $428.93 per contract and the computed maximum loss is -$505.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a KALU butterfly?

The breakeven for the KALU butterfly priced on this page is roughly $190.05 and $201.26 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 KALU market-implied 1-standard-deviation expected move is approximately 11.15%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current KALU implied volatility affect this butterfly?

KALU ATM IV is at 38.90% with IV rank near 29.30%, 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.

KALU Butterfly Strategy

KALU (Kaiser Aluminum Corporation), in the Basic Materials sector, (Aluminum industry), listed on NASDAQ.

Kaiser Aluminum Corporation is a global producer and vendor of specialized, semi-finished aluminum mill products, operating both domestically within the United States and internationally. Their diverse product portfolio encompasses aluminum items manufactured through rolling, extrusion, and drawing processes. These are essential for various industries, including aerospace and defense, automotive, general engineering, and for the packaging of food and beverages. For the automotive sector, Kaiser Aluminum provides extruded components used in structural parts, crash management systems, and anti-lock braking systems. They also supply drawn tubes for drive shafts and offer value-added fabrication services, such as precise sawing and cutting to specific lengths. Their packaging division specializes in bare and coated aluminum coils, primarily from the 3000- and 5000-series alloys, which are extensively utilized in the beverage and food packaging industry.

KALU (Kaiser Aluminum Corporation) trades in the Basic Materials sector, specifically Aluminum, with a market capitalization of approximately $3.06B, a trailing P/E of 19.82, a beta of 1.60 versus the broader market, a 52-week range of 71.44-195.22, average daily share volume of 273K, a public-listing history dating back to 2006, approximately 4K full-time employees. These structural characteristics shape how KALU stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.60 indicates KALU has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. KALU pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on KALU?

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 KALU snapshot

As of June 30, 2026, spot at $192.75, ATM IV 38.90%, IV rank 29.30%, expected move 11.15%. The butterfly on KALU 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 17-day expiry.

Why this butterfly structure on KALU specifically: KALU IV at 38.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a KALU butterfly, with a market-implied 1-standard-deviation move of approximately 11.15% (roughly $21.50 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KALU expiries trade a higher absolute premium for lower per-day decay. Position sizing on KALU should anchor to the underlying notional of $192.75 per share and to the trader's directional view on KALU stock.

KALU butterfly setup

The KALU 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 KALU near $192.75, the first option leg uses a $185.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KALU chain at a 17-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 KALU shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$185.00	$12.50
Sell 2	Call	$195.00	$5.60
Buy 1	Call	$200.00	$3.75

KALU butterfly risk and reward

Net Premium / Debit: -$505.00
Max Profit (per contract): $428.93
Max Loss (per contract): -$505.00
Breakeven(s): $190.05, $201.26
Risk / Reward Ratio: 0.849

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.

KALU butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on KALU. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$505.00
$42.63	-77.9%	-$505.00
$85.24	-55.8%	-$505.00
$127.86	-33.7%	-$505.00
$170.48	-11.6%	-$505.00
$213.09	+10.6%	-$5.00
$255.71	+32.7%	-$5.00
$298.33	+54.8%	-$5.00
$340.95	+76.9%	-$5.00
$383.56	+99.0%	-$5.00

When traders use butterfly on KALU

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

KALU thesis for this butterfly

The market-implied 1-standard-deviation range for KALU extends from approximately $171.25 on the downside to $214.25 on the upside. A KALU long call butterfly is a pinning play: it pays maximum at the middle strike if KALU settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current KALU IV rank near 29.30% 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 KALU at 38.90%. As a Basic Materials name, KALU options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KALU-specific events.

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

Frequently asked questions

What is a butterfly on KALU?: A butterfly on KALU is the butterfly strategy applied to KALU (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 KALU stock trading near $192.75, the strikes shown on this page are snapped to the nearest listed KALU chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are KALU 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 KALU butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 38.90%), the computed maximum profit is $428.93 per contract and the computed maximum loss is -$505.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a KALU butterfly?: The breakeven for the KALU butterfly priced on this page is roughly $190.05 and $201.26 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 KALU market-implied 1-standard-deviation expected move is approximately 11.15%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on KALU?: Butterflies on KALU are pinning bets - traders use them when they expect KALU 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 KALU implied volatility affect this butterfly?: KALU ATM IV is at 38.90% with IV rank near 29.30%, 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.