PAG Butterfly Strategy
PAG (Penske Automotive Group, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NYSE.
Penske Automotive Group, Inc. (PAG) is a comprehensive transportation services enterprise, primarily involved in running automotive and commercial truck dealerships. Its business activities are organized into four main segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. The company operates a network of automotive dealerships under franchise agreements with various vehicle manufacturers, facilitating the sale of new and pre-owned automobiles. These dealerships also provide essential related services, including vehicle and collision repair, assisting with finance and lease agreements, offering third-party insurance products, and selling various aftermarket items, alongside wholesale parts distribution. In the commercial truck sector, Penske manages dealerships that offer new heavy and medium-duty trucks, notably Freightliner and Western Star brands, as well as a selection of used trucks, complemented by maintenance and repair services. Expanding its global reach, the company imports and distributes Western Star heavy-duty trucks, MAN heavy and medium-duty trucks and buses, and Dennis Eagle refuse collection vehicles, along with their associated parts, across Australia, New Zealand, and parts of the Pacific.
PAG (Penske Automotive Group, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $14.31B, a trailing P/E of 15.33, a beta of 0.83 versus the broader market, a 52-week range of 140.12-227, average daily share volume of 346K, a public-listing history dating back to 1996, approximately 29K full-time employees. These structural characteristics shape how PAG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.83 places PAG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. PAG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on PAG?
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.
PAG snapshot
As of August 14, 2026, spot at $220.19, ATM IV 7.40%, IV rank 0.67%, expected move 2.12%. The butterfly on PAG 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 35-day expiry.
Why this butterfly structure on PAG specifically: PAG IV at 7.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a PAG butterfly, with a market-implied 1-standard-deviation move of approximately 2.12% (roughly $4.67 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 PAG expiries trade a higher absolute premium for lower per-day decay. Position sizing on PAG should anchor to the underlying notional of $220.19 per share and to the trader's directional view on PAG stock.
PAG butterfly setup
The PAG 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 PAG at $220.19 on that close, the first option leg uses a $210.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PAG 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 PAG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $210.00 | $11.25 |
| Sell 2 | Call | $220.00 | $4.45 |
| Buy 1 | Call | $230.00 | $0.88 |
PAG butterfly risk and reward
- Net Premium / Debit
- -$323.00
- Max Profit (per contract)
- $585.85
- Max Loss (per contract)
- -$323.00
- Breakeven(s)
- $213.23, $226.77
- Risk / Reward Ratio
- 1.814
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.
PAG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on PAG. 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% | -$323.00 |
| $48.69 | -77.9% | -$323.00 |
| $97.38 | -55.8% | -$323.00 |
| $146.06 | -33.7% | -$323.00 |
| $194.75 | -11.6% | -$323.00 |
| $243.43 | +10.6% | -$323.00 |
| $292.11 | +32.7% | -$323.00 |
| $340.80 | +54.8% | -$323.00 |
| $389.48 | +76.9% | -$323.00 |
| $438.17 | +99.0% | -$323.00 |
When traders use butterfly on PAG
Butterflies on PAG are pinning bets - traders use them when they expect PAG 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.
PAG thesis for this butterfly
The market-implied 1-standard-deviation range for PAG extends from approximately $215.52 on the downside to $224.86 on the upside. A PAG long call butterfly is a pinning play: it pays maximum at the middle strike if PAG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current PAG IV rank near 0.67% 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 PAG at 7.40%. As a Consumer Cyclical name, PAG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PAG-specific events.
PAG 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. PAG positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PAG alongside the broader basket even when PAG-specific fundamentals are unchanged. Always rebuild the position from current PAG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on PAG?
- A butterfly on PAG is the butterfly strategy applied to PAG (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 PAG stock at $220.19 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed PAG chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are PAG 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 PAG butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 7.40%), the computed maximum profit is $585.85 per contract and the computed maximum loss is -$323.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PAG butterfly?
- The breakeven for the PAG butterfly priced on this page is roughly $213.23 and $226.77 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 PAG market-implied 1-standard-deviation expected move in the same options snapshot is approximately 2.12%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on PAG?
- Butterflies on PAG are pinning bets - traders use them when they expect PAG 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 PAG implied volatility affect this butterfly?
- PAG ATM IV is at 7.40% with IV rank near 0.67%, 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.