NET Butterfly Strategy
NET (Cloudflare, Inc.), in the Technology sector, (Software - Infrastructure industry), listed on NYSE.
CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company offers an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices. Its security products comprise cloud firewall, bot management, distributed denial of service, IoT, SSL/TLS, secure origin connection, and rate limiting products. The company also offers performance solutions, which include content delivery and intelligent routing, as well as content, mobile, and image optimization solutions. In addition, it provides reliability solutions comprising load balancing, anycast network, virtual backbone, DNS, DNS resolver, online, and virtual waiting room solutions. Further, the company offers Cloudflare internal infrastructure solutions, including on-ramps, which connect users, devices, or locations to its network; and filters, which are the products that protect, inspect, and privilege data.
NET (Cloudflare, Inc.) trades in the Technology sector, specifically Software - Infrastructure, with a market capitalization of approximately $68.08B, a beta of 1.67 versus the broader market, a 52-week range of 150.594-260, average daily share volume of 4.5M, a public-listing history dating back to 2019, approximately 4K full-time employees. These structural characteristics shape how NET stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.67 indicates NET has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a butterfly on NET?
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 NET snapshot
As of May 15, 2026, spot at $197.11, ATM IV 60.67%, IV rank 44.48%, expected move 17.39%. The butterfly on NET 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 28-day expiry.
Why this butterfly structure on NET specifically: NET IV at 60.67% 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 17.39% (roughly $34.29 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated NET expiries trade a higher absolute premium for lower per-day decay. Position sizing on NET should anchor to the underlying notional of $197.11 per share and to the trader's directional view on NET stock.
NET butterfly setup
The NET 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 NET near $197.11, the first option leg uses a $185.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NET chain at a 28-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 NET shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $185.00 | $21.05 |
| Sell 2 | Call | $195.00 | $14.55 |
| Buy 1 | Call | $205.00 | $10.00 |
NET butterfly risk and reward
- Net Premium / Debit
- -$195.00
- Max Profit (per contract)
- $719.36
- Max Loss (per contract)
- -$195.00
- Breakeven(s)
- $186.95, $203.05
- Risk / Reward Ratio
- 3.689
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.
NET butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on NET. 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% | -$195.00 |
| $43.59 | -77.9% | -$195.00 |
| $87.17 | -55.8% | -$195.00 |
| $130.75 | -33.7% | -$195.00 |
| $174.33 | -11.6% | -$195.00 |
| $217.92 | +10.6% | -$195.00 |
| $261.50 | +32.7% | -$195.00 |
| $305.08 | +54.8% | -$195.00 |
| $348.66 | +76.9% | -$195.00 |
| $392.24 | +99.0% | -$195.00 |
When traders use butterfly on NET
Butterflies on NET are pinning bets - traders use them when they expect NET 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.
NET thesis for this butterfly
The market-implied 1-standard-deviation range for NET extends from approximately $162.82 on the downside to $231.40 on the upside. A NET long call butterfly is a pinning play: it pays maximum at the middle strike if NET settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current NET IV rank near 44.48% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on NET should anchor more to the directional view and the expected-move geometry. As a Technology name, NET options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NET-specific events.
NET 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. NET positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NET alongside the broader basket even when NET-specific fundamentals are unchanged. Always rebuild the position from current NET chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on NET?
- A butterfly on NET is the butterfly strategy applied to NET (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 NET stock trading near $197.11, the strikes shown on this page are snapped to the nearest listed NET chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NET 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 NET butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 60.67%), the computed maximum profit is $719.36 per contract and the computed maximum loss is -$195.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a NET butterfly?
- The breakeven for the NET butterfly priced on this page is roughly $186.95 and $203.05 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 NET market-implied 1-standard-deviation expected move is approximately 17.39%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on NET?
- Butterflies on NET are pinning bets - traders use them when they expect NET 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 NET implied volatility affect this butterfly?
- NET ATM IV is at 60.67% with IV rank near 44.48%, 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.