NGS Butterfly Strategy
NGS (Natural Gas Services Group, Inc.), in the Energy sector, (Oil & Gas Equipment & Services industry), listed on NYSE.
Natural Gas Services Group, Inc. (NGS) is a U.S.-based company that specializes in providing natural gas compression solutions and equipment to the energy sector. NGS's activities encompass the full lifecycle of natural gas compressors and associated gear, including their design, manufacturing, rental, and sale. A significant portion of its operations centers on the rental of compression units, which cater to small, medium, and large horsepower requirements, primarily supporting unconventional oil and natural gas extraction. As of December 31, 2021, NGS maintained a substantial rental fleet comprising 2,023 natural gas compression units, collectively generating 418,041 horsepower. Beyond rental, NGS is also involved in the engineering, fabrication, and assembly of compressor components, which are then integrated into full compressor units for either rental or direct sale. The company further designs and manufactures its own range of reciprocating compressor frames, cylinders, and various parts.
NGS (Natural Gas Services Group, Inc.) trades in the Energy sector, specifically Oil & Gas Equipment & Services, with a market capitalization of approximately $463.9M, a trailing P/E of 22.71, a beta of 0.43 versus the broader market, a 52-week range of 23.96-44.61, average daily share volume of 115K, a public-listing history dating back to 2002, approximately 259 full-time employees. These structural characteristics shape how NGS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.43 indicates NGS has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. NGS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on NGS?
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.
NGS snapshot
As of August 14, 2026, spot at $37.94, ATM IV 45.20%, IV rank 18.10%, expected move 12.96%. The butterfly on NGS below is built from the 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 NGS specifically: NGS IV at 45.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a NGS butterfly, with a market-implied 1-standard-deviation move of approximately 12.96% (roughly $4.92 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 NGS expiries trade a higher absolute premium for lower per-day decay. Position sizing on NGS should anchor to the underlying notional of $37.94 per share and to the trader's directional view on NGS stock.
NGS butterfly setup
The NGS 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 NGS at $37.94 on that close, the first option leg uses a $36.04 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NGS 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 NGS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $36.04 | N/A |
| Sell 2 | Call | $37.94 | N/A |
| Buy 1 | Call | $39.84 | N/A |
NGS 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.
NGS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on NGS. 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 NGS
Butterflies on NGS are pinning bets - traders use them when they expect NGS 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.
NGS thesis for this butterfly
The market-implied 1-standard-deviation range for NGS extends from approximately $33.02 on the downside to $42.86 on the upside. A NGS long call butterfly is a pinning play: it pays maximum at the middle strike if NGS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current NGS IV rank near 18.10% 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 NGS at 45.20%. As a Energy name, NGS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NGS-specific events.
NGS 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. NGS positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NGS alongside the broader basket even when NGS-specific fundamentals are unchanged. Always rebuild the position from current NGS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on NGS?
- A butterfly on NGS is the butterfly strategy applied to NGS (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 NGS stock at $37.94 on the most recent close, the strikes shown on this page are snapped to the nearest listed NGS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are NGS 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 NGS butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 45.20%), 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 NGS butterfly?
- The breakeven for the NGS butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from the end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The NGS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.96%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on NGS?
- Butterflies on NGS are pinning bets - traders use them when they expect NGS 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 NGS implied volatility affect this butterfly?
- NGS ATM IV is at 45.20% with IV rank near 18.10%, 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.