How are PAA 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 PAA butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 19.19%), the computed maximum profit is $65.96 per contract and the computed maximum loss is -$77.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a PAA butterfly?

The breakeven for the PAA butterfly priced on this page is roughly $23.28 and $24.73 at expiration, derived from the August 14, 2026 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 PAA market-implied 1-standard-deviation expected move in the same options snapshot is approximately 5.50%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current PAA implied volatility affect this butterfly?

PAA ATM IV is at 19.19% with IV rank near 34.44%, 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.

PAA Butterfly Strategy

PAA (Plains All American Pipeline, L.P.), in the Energy sector, (Oil & Gas Midstream industry), listed on NASDAQ.

Plains All American Pipeline, L.P., through its subsidiaries, engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada. The company operates through two segments, Crude Oil and NGL. The Crude Oil segment offers gathering and transporting crude oil through pipelines, trucks, and on barges or railcars. This segment provides terminalling, storage, and other related services, as well as merchant activities. The NGL segment is involved in natural gas processing and NGL fractionation, storage, transportation, and terminaling. This segment also includes ethane, propane, normal butane, iso-butane, and natural gasoline derived from natural gas production and processing activities, as well as crude oil refining processes.

PAA (Plains All American Pipeline, L.P.) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $16.40B, a trailing P/E of 5.93, a beta of 0.49 versus the broader market, a 52-week range of 15.69-25.03, average daily share volume of 2.7M, a public-listing history dating back to 1998, approximately 4K full-time employees. These structural characteristics shape how PAA stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.49 indicates PAA has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. The trailing P/E of 5.93 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. PAA pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on PAA?

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.

PAA snapshot

As of August 14, 2026, spot at $23.81, ATM IV 19.19%, IV rank 34.44%, expected move 5.50%. The butterfly on PAA below is built from the August 14, 2026 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 PAA specifically: PAA IV at 19.19% 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 5.50% (roughly $1.31 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 PAA expiries trade a higher absolute premium for lower per-day decay. Position sizing on PAA should anchor to the underlying notional of $23.81 per share and to the trader's directional view on PAA stock.

PAA butterfly setup

The PAA butterfly below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With PAA at $23.81 on that close, the first option leg uses a $22.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PAA 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 PAA shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$22.50	$1.45
Sell 2	Call	$24.00	$0.43
Buy 1	Call	$25.00	$0.18

PAA butterfly risk and reward

Net Premium / Debit: -$77.50
Max Profit (per contract): $65.96
Max Loss (per contract): -$77.50
Breakeven(s): $23.28, $24.73
Risk / Reward Ratio: 0.851

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.

PAA butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on PAA. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$77.50
$5.27	-77.9%	-$77.50
$10.54	-55.7%	-$77.50
$15.80	-33.6%	-$77.50
$21.06	-11.5%	-$77.50
$26.33	+10.6%	-$27.50
$31.59	+32.7%	-$27.50
$36.85	+54.8%	-$27.50
$42.12	+76.9%	-$27.50
$47.38	+99.0%	-$27.50

When traders use butterfly on PAA

Butterflies on PAA are pinning bets - traders use them when they expect PAA 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.

PAA thesis for this butterfly

The market-implied 1-standard-deviation range for PAA extends from approximately $22.50 on the downside to $25.12 on the upside. A PAA long call butterfly is a pinning play: it pays maximum at the middle strike if PAA settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current PAA IV rank near 34.44% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on PAA should anchor more to the directional view and the expected-move geometry. As a Energy name, PAA options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PAA-specific events.

PAA 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. PAA positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PAA alongside the broader basket even when PAA-specific fundamentals are unchanged. Always rebuild the position from current PAA chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on PAA?: A butterfly on PAA is the butterfly strategy applied to PAA (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 PAA stock at $23.81 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed PAA chain strike and the premiums come straight from that session's bid/ask midpoint.
How are PAA 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 PAA butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 19.19%), the computed maximum profit is $65.96 per contract and the computed maximum loss is -$77.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a PAA butterfly?: The breakeven for the PAA butterfly priced on this page is roughly $23.28 and $24.73 at expiration, derived from the August 14, 2026 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 PAA market-implied 1-standard-deviation expected move in the same options snapshot is approximately 5.50%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on PAA?: Butterflies on PAA are pinning bets - traders use them when they expect PAA 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 PAA implied volatility affect this butterfly?: PAA ATM IV is at 19.19% with IV rank near 34.44%, 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.