How are KMX 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 KMX butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 68.00%), the computed maximum profit is $255.21 per contract and the computed maximum loss is $12.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a KMX butterfly?

The breakeven for the KMX butterfly priced on this page is no defined breakeven on the modeled curve 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 KMX market-implied 1-standard-deviation expected move is approximately 19.50%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current KMX implied volatility affect this butterfly?

KMX ATM IV is at 68.00% with IV rank near 61.50%, 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.

KMX Butterfly Strategy

KMX (CarMax, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NYSE.

CarMax, Inc., together with its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates through two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; and extended protection plans to customers at the time of sale, as well as sells vehicles that are approximately 10 years old and has more than 100,000 miles through wholesale auctions. The company also provides reconditioning and vehicle repair services; and financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with various financial institutions. As of February 28, 2022, it operated approximately 230 used car stores. CarMax, Inc. was founded in 1993 and is based in Richmond, Virginia.

KMX (CarMax, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $5.26B, a trailing P/E of 22.07, a beta of 1.18 versus the broader market, a 52-week range of 30.26-71.99, average daily share volume of 3.3M, a public-listing history dating back to 1997, approximately 30K full-time employees. These structural characteristics shape how KMX stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.18 places KMX roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a butterfly on KMX?

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 KMX snapshot

As of May 15, 2026, spot at $37.01, ATM IV 68.00%, IV rank 61.50%, expected move 19.50%. The butterfly on KMX 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 63-day expiry.

Why this butterfly structure on KMX specifically: KMX IV at 68.00% 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 19.50% (roughly $7.22 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KMX expiries trade a higher absolute premium for lower per-day decay. Position sizing on KMX should anchor to the underlying notional of $37.01 per share and to the trader's directional view on KMX stock.

KMX butterfly setup

The KMX 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 KMX near $37.01, the first option leg uses a $35.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KMX chain at a 63-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 KMX shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$35.00	$5.10
Sell 2	Call	$37.50	$3.85
Buy 1	Call	$40.00	$2.48

KMX butterfly risk and reward

Net Premium / Debit: +$12.50
Max Profit (per contract): $255.21
Max Loss (per contract): $12.50
Breakeven(s): None on modeled curve
Risk / Reward Ratio: 20.417

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.

KMX butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on KMX. 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%	+$12.50
$8.19	-77.9%	+$12.50
$16.37	-55.8%	+$12.50
$24.56	-33.7%	+$12.50
$32.74	-11.5%	+$12.50
$40.92	+10.6%	+$12.50
$49.10	+32.7%	+$12.50
$57.28	+54.8%	+$12.50
$65.47	+76.9%	+$12.50
$73.65	+99.0%	+$12.50

When traders use butterfly on KMX

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

KMX thesis for this butterfly

The market-implied 1-standard-deviation range for KMX extends from approximately $29.79 on the downside to $44.23 on the upside. A KMX long call butterfly is a pinning play: it pays maximum at the middle strike if KMX settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current KMX IV rank near 61.50% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on KMX should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, KMX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KMX-specific events.

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

Frequently asked questions

What is a butterfly on KMX?: A butterfly on KMX is the butterfly strategy applied to KMX (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 KMX stock trading near $37.01, the strikes shown on this page are snapped to the nearest listed KMX chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are KMX 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 KMX butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 68.00%), the computed maximum profit is $255.21 per contract and the computed maximum loss is $12.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a KMX butterfly?: The breakeven for the KMX butterfly priced on this page is no defined breakeven on the modeled curve 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 KMX market-implied 1-standard-deviation expected move is approximately 19.50%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on KMX?: Butterflies on KMX are pinning bets - traders use them when they expect KMX 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 KMX implied volatility affect this butterfly?: KMX ATM IV is at 68.00% with IV rank near 61.50%, 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.