LOB Butterfly Strategy
LOB (Live Oak Bancshares, Inc.), in the Financial Services sector, (Banks - Regional industry), listed on NYSE.
Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various commercial banking products and services to individuals, small businesses, and professionals in North Carolina, the United States. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; wealth and investment management services to high-net-worth individuals and families; investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies; and an on-site restaurant location to company employees and business visitors. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.
LOB (Live Oak Bancshares, Inc.) trades in the Financial Services sector, specifically Banks - Regional, with a market capitalization of approximately $1.65B, a trailing P/E of 13.22, a beta of 1.92 versus the broader market, a 52-week range of 26.19-42.89, average daily share volume of 265K, a public-listing history dating back to 2015, approximately 1K full-time employees. These structural characteristics shape how LOB stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.92 indicates LOB has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. LOB pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on LOB?
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 LOB snapshot
As of May 14, 2026, spot at $36.12, ATM IV 35.80%, IV rank 3.16%, expected move 10.26%. The butterfly on LOB 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 35-day expiry.
Why this butterfly structure on LOB specifically: LOB IV at 35.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a LOB butterfly, with a market-implied 1-standard-deviation move of approximately 10.26% (roughly $3.71 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 LOB expiries trade a higher absolute premium for lower per-day decay. Position sizing on LOB should anchor to the underlying notional of $36.12 per share and to the trader's directional view on LOB stock.
LOB butterfly setup
The LOB 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 LOB near $36.12, the first option leg uses a $34.31 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LOB 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 LOB shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $34.31 | N/A |
| Sell 2 | Call | $36.12 | N/A |
| Buy 1 | Call | $37.93 | N/A |
LOB 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.
LOB butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on LOB. 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 LOB
Butterflies on LOB are pinning bets - traders use them when they expect LOB 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.
LOB thesis for this butterfly
The market-implied 1-standard-deviation range for LOB extends from approximately $32.41 on the downside to $39.83 on the upside. A LOB long call butterfly is a pinning play: it pays maximum at the middle strike if LOB settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current LOB IV rank near 3.16% 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 LOB at 35.80%. As a Financial Services name, LOB options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LOB-specific events.
LOB 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. LOB positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move LOB alongside the broader basket even when LOB-specific fundamentals are unchanged. Always rebuild the position from current LOB chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on LOB?
- A butterfly on LOB is the butterfly strategy applied to LOB (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 LOB stock trading near $36.12, the strikes shown on this page are snapped to the nearest listed LOB chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are LOB 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 LOB butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 35.80%), 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 LOB butterfly?
- The breakeven for the LOB 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 LOB market-implied 1-standard-deviation expected move is approximately 10.26%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on LOB?
- Butterflies on LOB are pinning bets - traders use them when they expect LOB 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 LOB implied volatility affect this butterfly?
- LOB ATM IV is at 35.80% with IV rank near 3.16%, 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.