NL Butterfly Strategy
NL (NL Industries, Inc.), in the Industrials sector, (Security & Protection Services industry), listed on NYSE.
NL Industries, Inc., through its subsidiary CompX International Inc., is a global and domestic manufacturer specializing in diverse component products. The company provides an extensive portfolio of mechanical and electronic locking mechanisms. This range includes various cabinet locks, such as classic disc tumbler and pin tumbler designs, alongside modern electronic options like CompX eLock and StealthLock systems. These security solutions are integral to a wide array of applications, including ignition systems, mailboxes, office furniture (file and desk cabinets), tool storage, integrated inventory and access control for secure narcotics boxes, vending and cash containment systems, medical cabinetry, electronic circuit panels, general storage compartments, and gas station security. Beyond locking devices, NL Industries also supplies a broad selection of original equipment and aftermarket components, primarily for performance and ski/wakeboard boats. These offerings include stainless steel exhaust systems such as headers, pipes, and mufflers, as well as other exhaust-related parts.
NL (NL Industries, Inc.) trades in the Industrials sector, specifically Security & Protection Services, with a market capitalization of approximately $286.3M, a beta of 0.20 versus the broader market, a 52-week range of 5.04-8.6, average daily share volume of 60K, a public-listing history dating back to 1980, approximately 3K full-time employees. These structural characteristics shape how NL stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.20 indicates NL has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. NL pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on NL?
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 NL snapshot
As of June 29, 2026, spot at $6.29, ATM IV 83.30%, IV rank 17.61%, expected move 23.88%. The butterfly on NL 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 18-day expiry.
Why this butterfly structure on NL specifically: NL IV at 83.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a NL butterfly, with a market-implied 1-standard-deviation move of approximately 23.88% (roughly $1.50 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated NL expiries trade a higher absolute premium for lower per-day decay. Position sizing on NL should anchor to the underlying notional of $6.29 per share and to the trader's directional view on NL stock.
NL butterfly setup
The NL 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 NL near $6.29, the first option leg uses a $5.98 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NL chain at a 18-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 NL shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $5.98 | N/A |
| Sell 2 | Call | $6.29 | N/A |
| Buy 1 | Call | $6.60 | N/A |
NL 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.
NL butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on NL. 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 NL
Butterflies on NL are pinning bets - traders use them when they expect NL 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.
NL thesis for this butterfly
The market-implied 1-standard-deviation range for NL extends from approximately $4.79 on the downside to $7.79 on the upside. A NL long call butterfly is a pinning play: it pays maximum at the middle strike if NL settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current NL IV rank near 17.61% 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 NL at 83.30%. As a Industrials name, NL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NL-specific events.
NL 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. NL positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NL alongside the broader basket even when NL-specific fundamentals are unchanged. Always rebuild the position from current NL chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on NL?
- A butterfly on NL is the butterfly strategy applied to NL (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 NL stock trading near $6.29, the strikes shown on this page are snapped to the nearest listed NL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NL 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 NL butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 83.30%), 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 NL butterfly?
- The breakeven for the NL 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 NL market-implied 1-standard-deviation expected move is approximately 23.88%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on NL?
- Butterflies on NL are pinning bets - traders use them when they expect NL 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 NL implied volatility affect this butterfly?
- NL ATM IV is at 83.30% with IV rank near 17.61%, 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.