LION Butterfly Strategy
LION (Lionsgate Studios Corp.), in the Communication Services sector, (Entertainment industry), listed on NYSE.
Lionsgate Studios is one of the world’s leading standalone, pure play, publicly-traded content companies. It brings together diversified motion picture and television production and distribution businesses, a world-class portfolio of valuable brands and franchises, a talent management and production powerhouse and a more than 20,000-title film and television library, all driven by Lionsgate’s bold and entrepreneurial culture.
LION (Lionsgate Studios Corp.) trades in the Communication Services sector, specifically Entertainment, with a market capitalization of approximately $3.64B, a beta of 0.10 versus the broader market, a 52-week range of 5.545-13, average daily share volume of 3.0M, a public-listing history dating back to 2022, approximately 2K full-time employees. These structural characteristics shape how LION stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.10 indicates LION has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a butterfly on LION?
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 LION snapshot
As of May 14, 2026, spot at $12.68, ATM IV 68.10%, IV rank 6.84%, expected move 19.52%. The butterfly on LION 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 LION specifically: LION IV at 68.10% is on the cheap side of its 1-year range, which favors premium-buying structures like a LION butterfly, with a market-implied 1-standard-deviation move of approximately 19.52% (roughly $2.48 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 LION expiries trade a higher absolute premium for lower per-day decay. Position sizing on LION should anchor to the underlying notional of $12.68 per share and to the trader's directional view on LION stock.
LION butterfly setup
The LION 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 LION near $12.68, the first option leg uses a $12.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LION 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 LION shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $12.00 | $1.55 |
| Sell 2 | Call | $13.00 | $0.95 |
| Buy 1 | Call | $13.00 | $0.95 |
LION butterfly risk and reward
- Net Premium / Debit
- -$60.00
- Max Profit (per contract)
- $40.00
- Max Loss (per contract)
- -$60.00
- Breakeven(s)
- $12.60
- Risk / Reward Ratio
- 0.667
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.
LION butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on LION. 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 | -99.9% | -$60.00 |
| $2.81 | -77.8% | -$60.00 |
| $5.62 | -55.7% | -$60.00 |
| $8.42 | -33.6% | -$60.00 |
| $11.22 | -11.5% | -$60.00 |
| $14.02 | +10.6% | +$40.00 |
| $16.83 | +32.7% | +$40.00 |
| $19.63 | +54.8% | +$40.00 |
| $22.43 | +76.9% | +$40.00 |
| $25.23 | +99.0% | +$40.00 |
When traders use butterfly on LION
Butterflies on LION are pinning bets - traders use them when they expect LION 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.
LION thesis for this butterfly
The market-implied 1-standard-deviation range for LION extends from approximately $10.20 on the downside to $15.16 on the upside. A LION long call butterfly is a pinning play: it pays maximum at the middle strike if LION settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current LION IV rank near 6.84% 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 LION at 68.10%. As a Communication Services name, LION options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LION-specific events.
LION 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. LION positions also carry Communication Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move LION alongside the broader basket even when LION-specific fundamentals are unchanged. Always rebuild the position from current LION chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on LION?
- A butterfly on LION is the butterfly strategy applied to LION (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 LION stock trading near $12.68, the strikes shown on this page are snapped to the nearest listed LION chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are LION 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 LION butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 68.10%), the computed maximum profit is $40.00 per contract and the computed maximum loss is -$60.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a LION butterfly?
- The breakeven for the LION butterfly priced on this page is roughly $12.60 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 LION market-implied 1-standard-deviation expected move is approximately 19.52%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on LION?
- Butterflies on LION are pinning bets - traders use them when they expect LION 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 LION implied volatility affect this butterfly?
- LION ATM IV is at 68.10% with IV rank near 6.84%, 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.