PEG Butterfly Strategy
PEG (Public Service Enterprise Group Incorporated), in the Utilities sector, (Regulated Electric industry), listed on NYSE.
Public Service Enterprise Group Incorporated, through its subsidiaries, operates as an energy company primarily in the Northeastern and Mid-Atlantic United States. It operates through two segments, PSE&G and PSEG Power. The PSE&G segment transmits electricity; distributes electricity and gas to residential, commercial, and industrial customers, as well as invests in solar generation projects, and energy efficiency and related programs; and offers appliance services and repairs. As of December 31, 2021, it had electric transmission and distribution system of 25,000 circuit miles and 862,000 poles; 56 switching stations with an installed capacity of 39,353 megavolt-amperes (MVA), and 235 substations with an installed capacity of 9,285 MVA; four electric distribution headquarters and five electric sub-headquarters; and 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 58 natural gas metering and regulating stations. Public Service Enterprise Group Incorporated was incorporated in 1985 and is based in Newark, New Jersey.
PEG (Public Service Enterprise Group Incorporated) trades in the Utilities sector, specifically Regulated Electric, with a market capitalization of approximately $38.48B, a trailing P/E of 17.03, a beta of 0.55 versus the broader market, a 52-week range of 76.6-91.26, average daily share volume of 2.7M, a public-listing history dating back to 1980, approximately 13K full-time employees. These structural characteristics shape how PEG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.55 indicates PEG has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. PEG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on PEG?
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 PEG snapshot
As of May 15, 2026, spot at $76.54, ATM IV 21.30%, IV rank 22.24%, expected move 6.11%. The butterfly on PEG 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 34-day expiry.
Why this butterfly structure on PEG specifically: PEG IV at 21.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a PEG butterfly, with a market-implied 1-standard-deviation move of approximately 6.11% (roughly $4.67 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated PEG expiries trade a higher absolute premium for lower per-day decay. Position sizing on PEG should anchor to the underlying notional of $76.54 per share and to the trader's directional view on PEG stock.
PEG butterfly setup
The PEG 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 PEG near $76.54, the first option leg uses a $72.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PEG chain at a 34-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 PEG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $72.50 | $5.20 |
| Sell 2 | Call | $77.50 | $1.43 |
| Buy 1 | Call | $80.00 | $0.60 |
PEG butterfly risk and reward
- Net Premium / Debit
- -$295.00
- Max Profit (per contract)
- $185.12
- Max Loss (per contract)
- -$295.00
- Breakeven(s)
- $75.45, $79.55
- Risk / Reward Ratio
- 0.628
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.
PEG butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on PEG. 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% | -$295.00 |
| $16.93 | -77.9% | -$295.00 |
| $33.85 | -55.8% | -$295.00 |
| $50.78 | -33.7% | -$295.00 |
| $67.70 | -11.6% | -$295.00 |
| $84.62 | +10.6% | -$45.00 |
| $101.54 | +32.7% | -$45.00 |
| $118.47 | +54.8% | -$45.00 |
| $135.39 | +76.9% | -$45.00 |
| $152.31 | +99.0% | -$45.00 |
When traders use butterfly on PEG
Butterflies on PEG are pinning bets - traders use them when they expect PEG 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.
PEG thesis for this butterfly
The market-implied 1-standard-deviation range for PEG extends from approximately $71.87 on the downside to $81.21 on the upside. A PEG long call butterfly is a pinning play: it pays maximum at the middle strike if PEG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current PEG IV rank near 22.24% 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 PEG at 21.30%. As a Utilities name, PEG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PEG-specific events.
PEG 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. PEG positions also carry Utilities sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PEG alongside the broader basket even when PEG-specific fundamentals are unchanged. Always rebuild the position from current PEG chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on PEG?
- A butterfly on PEG is the butterfly strategy applied to PEG (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 PEG stock trading near $76.54, the strikes shown on this page are snapped to the nearest listed PEG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are PEG 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 PEG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 21.30%), the computed maximum profit is $185.12 per contract and the computed maximum loss is -$295.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PEG butterfly?
- The breakeven for the PEG butterfly priced on this page is roughly $75.45 and $79.55 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 PEG market-implied 1-standard-deviation expected move is approximately 6.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on PEG?
- Butterflies on PEG are pinning bets - traders use them when they expect PEG 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 PEG implied volatility affect this butterfly?
- PEG ATM IV is at 21.30% with IV rank near 22.24%, 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.