MGY Butterfly Strategy
MGY (Magnolia Oil & Gas Corporation), in the Energy sector, (Oil & Gas Exploration & Production industry), listed on NYSE.
Magnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States. Its properties are located primarily in Karnes County and the Giddings Field in South Texas principally comprising the Eagle Ford Shale and the Austin Chalk formation. As of December 31, 2021, the company's assets consisted of a total leasehold position of 4,71,263 net acres, including 23,785 net acres in Karnes and 4,47,478 net acres in the Giddings area, as well as holds 1,292 net wells with a total production capacity of 66.0 thousand barrels of oil equivalent per day. The company was incorporated in 2017 and is headquartered in Houston, Texas.
MGY (Magnolia Oil & Gas Corporation) trades in the Energy sector, specifically Oil & Gas Exploration & Production, with a market capitalization of approximately $5.29B, a trailing P/E of 16.26, a beta of 0.75 versus the broader market, a 52-week range of 21.065-32.76, average daily share volume of 2.8M, a public-listing history dating back to 2017, approximately 252 full-time employees. These structural characteristics shape how MGY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.75 places MGY roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. MGY pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on MGY?
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 MGY snapshot
As of May 15, 2026, spot at $29.42, ATM IV 33.80%, IV rank 29.75%, expected move 9.69%. The butterfly on MGY 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 MGY specifically: MGY IV at 33.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a MGY butterfly, with a market-implied 1-standard-deviation move of approximately 9.69% (roughly $2.85 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 MGY expiries trade a higher absolute premium for lower per-day decay. Position sizing on MGY should anchor to the underlying notional of $29.42 per share and to the trader's directional view on MGY stock.
MGY butterfly setup
The MGY 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 MGY near $29.42, the first option leg uses a $27.95 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed MGY 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 MGY shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $27.95 | N/A |
| Sell 2 | Call | $29.42 | N/A |
| Buy 1 | Call | $30.89 | N/A |
MGY 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.
MGY butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on MGY. 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 MGY
Butterflies on MGY are pinning bets - traders use them when they expect MGY 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.
MGY thesis for this butterfly
The market-implied 1-standard-deviation range for MGY extends from approximately $26.57 on the downside to $32.27 on the upside. A MGY long call butterfly is a pinning play: it pays maximum at the middle strike if MGY settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current MGY IV rank near 29.75% 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 MGY at 33.80%. As a Energy name, MGY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to MGY-specific events.
MGY 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. MGY positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move MGY alongside the broader basket even when MGY-specific fundamentals are unchanged. Always rebuild the position from current MGY chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on MGY?
- A butterfly on MGY is the butterfly strategy applied to MGY (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 MGY stock trading near $29.42, the strikes shown on this page are snapped to the nearest listed MGY chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are MGY 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 MGY butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 33.80%), 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 MGY butterfly?
- The breakeven for the MGY 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 MGY market-implied 1-standard-deviation expected move is approximately 9.69%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on MGY?
- Butterflies on MGY are pinning bets - traders use them when they expect MGY 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 MGY implied volatility affect this butterfly?
- MGY ATM IV is at 33.80% with IV rank near 29.75%, 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.