NEON Butterfly Strategy
NEON (Neonode Inc.), in the Technology sector, (Hardware, Equipment & Parts industry), listed on NASDAQ.
Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, China, and internationally. It also offers software solutions for scene analysis using advanced machine learning algorithms to detect and track persons and objects in video streams for cameras and other types of imagers. In addition, the company licenses its technology to original equipment manufacturers (OEMs) and Tier 1 suppliers. Further, it provides embedded sensors modules to OEMs, original design manufacturers, and systems integrators; and engineering consulting services. Additionally, the company sells Neonode branded sensor products, such as AirBar products through distributors. It serves office equipment, automotive, industrial automation, medical, military, and avionics markets.
NEON (Neonode Inc.) trades in the Technology sector, specifically Hardware, Equipment & Parts, with a market capitalization of approximately $27.5M, a trailing P/E of 3.29, a beta of 1.00 versus the broader market, a 52-week range of 1.27-29.9, average daily share volume of 105K, a public-listing history dating back to 1989, approximately 40 full-time employees. These structural characteristics shape how NEON stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.00 places NEON roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 3.29 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price.
What is a butterfly on NEON?
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 NEON snapshot
As of May 15, 2026, spot at $1.65, ATM IV 20.90%, IV rank 0.17%, expected move 5.99%. The butterfly on NEON 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 NEON specifically: NEON IV at 20.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a NEON butterfly, with a market-implied 1-standard-deviation move of approximately 5.99% (roughly $0.10 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 NEON expiries trade a higher absolute premium for lower per-day decay. Position sizing on NEON should anchor to the underlying notional of $1.65 per share and to the trader's directional view on NEON stock.
NEON butterfly setup
The NEON 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 NEON near $1.65, the first option leg uses a $1.57 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NEON 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 NEON shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $1.57 | N/A |
| Sell 2 | Call | $1.65 | N/A |
| Buy 1 | Call | $1.73 | N/A |
NEON 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.
NEON butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on NEON. 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 NEON
Butterflies on NEON are pinning bets - traders use them when they expect NEON 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.
NEON thesis for this butterfly
The market-implied 1-standard-deviation range for NEON extends from approximately $1.55 on the downside to $1.75 on the upside. A NEON long call butterfly is a pinning play: it pays maximum at the middle strike if NEON settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current NEON IV rank near 0.17% 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 NEON at 20.90%. As a Technology name, NEON options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NEON-specific events.
NEON 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. NEON positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NEON alongside the broader basket even when NEON-specific fundamentals are unchanged. Always rebuild the position from current NEON chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on NEON?
- A butterfly on NEON is the butterfly strategy applied to NEON (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 NEON stock trading near $1.65, the strikes shown on this page are snapped to the nearest listed NEON chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NEON 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 NEON butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 20.90%), 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 NEON butterfly?
- The breakeven for the NEON 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 NEON market-implied 1-standard-deviation expected move is approximately 5.99%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on NEON?
- Butterflies on NEON are pinning bets - traders use them when they expect NEON 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 NEON implied volatility affect this butterfly?
- NEON ATM IV is at 20.90% with IV rank near 0.17%, 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.