PDS Butterfly Strategy
PDS (Precision Drilling Corporation), in the Energy sector, (Oil & Gas Drilling industry), listed on NYSE.
Precision Drilling Corporation (PDS), founded in 1951 and headquartered in Calgary, Canada, specializes in providing land-based drilling, well completion, and production support services. The company caters to upstream oil and gas as well as geothermal energy companies across North America and the Middle East. Its operations are structured into two distinct divisions: 1. Contract Drilling Services: This division is dedicated to land-based well drilling activities, encompassing both traditional and turnkey drilling solutions, the sourcing and delivery of essential oilfield materials, and the fabrication and overhaul of drilling and service rig machinery. By the close of 2021, this segment managed a global fleet of 227 land drilling rigs, with 109 located in Canada, 105 in the United States, 6 in Kuwait, 4 in Saudi Arabia, 2 in the Kurdistan region of Iraq, and a single rig in Georgia. The advanced fleet also featured 47 Alpha™ rigs equipped with commercial AlphaAutomation, 18 AlphaApps, 4 grid-power-compatible rigs, and 60 rigs capable of operating on natural gas or bi-fuel. 2.
PDS (Precision Drilling Corporation) trades in the Energy sector, specifically Oil & Gas Drilling, with a market capitalization of approximately $1.09B, a beta of 1.26 versus the broader market, a 52-week range of 52.53-103.8, average daily share volume of 114K, a public-listing history dating back to 1996, approximately 5K full-time employees. These structural characteristics shape how PDS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.26 places PDS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. PDS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on PDS?
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.
PDS snapshot
As of August 14, 2026, spot at $84.56, ATM IV 38.80%, IV rank 22.25%, expected move 11.12%. The butterfly on PDS 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 PDS specifically: PDS IV at 38.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a PDS butterfly, with a market-implied 1-standard-deviation move of approximately 11.12% (roughly $9.41 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 PDS expiries trade a higher absolute premium for lower per-day decay. Position sizing on PDS should anchor to the underlying notional of $84.56 per share and to the trader's directional view on PDS stock.
PDS butterfly setup
The PDS 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 PDS at $84.56 on that close, the first option leg uses a $80.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PDS 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 PDS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $80.00 | $6.55 |
| Sell 2 | Call | $85.00 | $3.55 |
| Buy 1 | Call | $90.00 | $2.30 |
PDS butterfly risk and reward
- Net Premium / Debit
- -$175.00
- Max Profit (per contract)
- $323.99
- Max Loss (per contract)
- -$175.00
- Breakeven(s)
- $81.75, $88.25
- Risk / Reward Ratio
- 1.851
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.
PDS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on PDS. 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% | -$175.00 |
| $18.71 | -77.9% | -$175.00 |
| $37.40 | -55.8% | -$175.00 |
| $56.10 | -33.7% | -$175.00 |
| $74.79 | -11.6% | -$175.00 |
| $93.49 | +10.6% | -$175.00 |
| $112.18 | +32.7% | -$175.00 |
| $130.88 | +54.8% | -$175.00 |
| $149.57 | +76.9% | -$175.00 |
| $168.27 | +99.0% | -$175.00 |
When traders use butterfly on PDS
Butterflies on PDS are pinning bets - traders use them when they expect PDS 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.
PDS thesis for this butterfly
The market-implied 1-standard-deviation range for PDS extends from approximately $75.15 on the downside to $93.97 on the upside. A PDS long call butterfly is a pinning play: it pays maximum at the middle strike if PDS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current PDS IV rank near 22.25% 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 PDS at 38.80%. As a Energy name, PDS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PDS-specific events.
PDS 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. PDS positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PDS alongside the broader basket even when PDS-specific fundamentals are unchanged. Always rebuild the position from current PDS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on PDS?
- A butterfly on PDS is the butterfly strategy applied to PDS (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 PDS stock at $84.56 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed PDS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are PDS 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 PDS butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 38.80%), the computed maximum profit is $323.99 per contract and the computed maximum loss is -$175.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PDS butterfly?
- The breakeven for the PDS butterfly priced on this page is roughly $81.75 and $88.25 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 PDS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 11.12%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on PDS?
- Butterflies on PDS are pinning bets - traders use them when they expect PDS 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 PDS implied volatility affect this butterfly?
- PDS ATM IV is at 38.80% with IV rank near 22.25%, 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.