KE Butterfly Strategy
KE (Kimball Electronics, Inc.), in the Industrials sector, (Electrical Equipment & Parts industry), listed on NASDAQ.
Kimball Electronics, Inc. specializes in providing comprehensive contract electronics manufacturing (CEM) and an array of diversified production solutions, catering to clients across the automotive, medical, industrial, and public safety sectors. Their extensive service portfolio encompasses initial design and development support, robust supply chain management, and agile rapid prototyping alongside streamlined product introduction capabilities. Key competencies also include comprehensive product design, rigorous process validation and qualification, and the industrialization and automation of complex manufacturing workflows. The company excels in reliability testing, subjecting products to a range of environmental conditions, and is proficient in the production and testing of printed circuit board assemblies. They also handle the assembly, production, and packaging of medical devices, including disposables and other non-electronic items, as well as electronic and non-electronic drug delivery systems. Additionally, their expertise extends to the design engineering and manufacturing of automation equipment, test and inspection equipment, and precision molded plastics, complemented by software design services and holistic product life cycle management.
KE (Kimball Electronics, Inc.) trades in the Industrials sector, specifically Electrical Equipment & Parts, with a market capitalization of approximately $621.7M, a trailing P/E of 22.49, a beta of 1.21 versus the broader market, a 52-week range of 21.01-33.19, average daily share volume of 183K, a public-listing history dating back to 2014, approximately 6K full-time employees. These structural characteristics shape how KE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.21 places KE roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on KE?
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.
KE snapshot
As of August 14, 2026, spot at $25.80, ATM IV 67.60%, IV rank 22.20%, expected move 19.38%. The butterfly on KE below is built from the 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 KE specifically: KE IV at 67.60% is on the cheap side of its 1-year range, which favors premium-buying structures like a KE butterfly, with a market-implied 1-standard-deviation move of approximately 19.38% (roughly $5.00 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 KE expiries trade a higher absolute premium for lower per-day decay. Position sizing on KE should anchor to the underlying notional of $25.80 per share and to the trader's directional view on KE stock.
KE butterfly setup
The KE 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 KE at $25.80 on that close, the first option leg uses a $24.51 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KE 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 KE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $24.51 | N/A |
| Sell 2 | Call | $25.80 | N/A |
| Buy 1 | Call | $27.09 | N/A |
KE butterfly risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
KE butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on KE. 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.
When traders use butterfly on KE
Butterflies on KE are pinning bets - traders use them when they expect KE 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.
KE thesis for this butterfly
The market-implied 1-standard-deviation range for KE extends from approximately $20.80 on the downside to $30.80 on the upside. A KE long call butterfly is a pinning play: it pays maximum at the middle strike if KE settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current KE IV rank near 22.20% 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 KE at 67.60%. As a Industrials name, KE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KE-specific events.
KE 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. KE positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move KE alongside the broader basket even when KE-specific fundamentals are unchanged. Always rebuild the position from current KE chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on KE?
- A butterfly on KE is the butterfly strategy applied to KE (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 KE stock at $25.80 on the most recent close, the strikes shown on this page are snapped to the nearest listed KE chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are KE 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 KE butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 67.60%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a KE butterfly?
- The breakeven for the KE butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from the 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 KE market-implied 1-standard-deviation expected move in the same options snapshot is approximately 19.38%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on KE?
- Butterflies on KE are pinning bets - traders use them when they expect KE 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 KE implied volatility affect this butterfly?
- KE ATM IV is at 67.60% with IV rank near 22.20%, 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.