How are RDW 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 RDW butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 120.79%), the computed maximum profit is $68.74 per contract and the computed maximum loss is -$30.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a RDW butterfly?

The breakeven for the RDW butterfly priced on this page is roughly $13.80 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 RDW market-implied 1-standard-deviation expected move is approximately 34.63%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current RDW implied volatility affect this butterfly?

RDW ATM IV is at 120.79% with IV rank near 83.56%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.

RDW Butterfly Strategy

RDW (Redwire Corporation), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.

Redwire Corporation, a space infrastructure company, develops, manufactures, and sells mission critical space solutions and components for national security, civil, and commercial space markets in the United States, Luxembourg, Germany, South Korea, Poland, and internationally. The company provides various antennas; and advanced sensors and components, which include solar arrays, composite booms, radio frequency antennas, payload adapters, space-qualifies camera systems, and star trackers and sun sensors. It also sells a proprietary enterprise software suite that enables digital engineering and generation of interactive modeling and simulations of individual components, entire spacecraft, and full constellations in a cloud-based Software as a Service business model. In addition, the company offers on-orbit servicing, assembly, and manufacturing solutions; and low-earth orbit commercialization, digitally engineered spacecraft, and space domain awareness and resiliency technology solutions. Redwire Corporation is headquartered in Jacksonville, Florida.

RDW (Redwire Corporation) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $1.72B, a beta of 2.42 versus the broader market, a 52-week range of 4.87-22.25, average daily share volume of 21.3M, a public-listing history dating back to 2021, approximately 750 full-time employees. These structural characteristics shape how RDW stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 2.42 indicates RDW has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.

What is a butterfly on RDW?

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 RDW snapshot

As of May 15, 2026, spot at $14.41, ATM IV 120.79%, IV rank 83.56%, expected move 34.63%. The butterfly on RDW 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 28-day expiry.

Why this butterfly structure on RDW specifically: RDW IV at 120.79% is rich versus its 1-year range, which makes a premium-buying RDW butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 34.63% (roughly $4.99 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 RDW expiries trade a higher absolute premium for lower per-day decay. Position sizing on RDW should anchor to the underlying notional of $14.41 per share and to the trader's directional view on RDW stock.

RDW butterfly setup

The RDW 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 RDW near $14.41, the first option leg uses a $13.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RDW 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 RDW shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$13.50	$2.38
Sell 2	Call	$14.50	$1.90
Buy 1	Call	$15.00	$1.73

RDW butterfly risk and reward

Net Premium / Debit: -$30.00
Max Profit (per contract): $68.74
Max Loss (per contract): -$30.00
Breakeven(s): $13.80
Risk / Reward Ratio: 2.291

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.

RDW butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on RDW. 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	-99.9%	-$30.00
$3.20	-77.8%	-$30.00
$6.38	-55.7%	-$30.00
$9.57	-33.6%	-$30.00
$12.75	-11.5%	-$30.00
$15.94	+10.6%	+$20.00
$19.12	+32.7%	+$20.00
$22.31	+54.8%	+$20.00
$25.49	+76.9%	+$20.00
$28.68	+99.0%	+$20.00

When traders use butterfly on RDW

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

RDW thesis for this butterfly

The market-implied 1-standard-deviation range for RDW extends from approximately $9.42 on the downside to $19.40 on the upside. A RDW long call butterfly is a pinning play: it pays maximum at the middle strike if RDW settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current RDW IV rank near 83.56% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on RDW at 120.79%. As a Industrials name, RDW options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RDW-specific events.

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

Frequently asked questions

What is a butterfly on RDW?: A butterfly on RDW is the butterfly strategy applied to RDW (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 RDW stock trading near $14.41, the strikes shown on this page are snapped to the nearest listed RDW chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are RDW 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 RDW butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 120.79%), the computed maximum profit is $68.74 per contract and the computed maximum loss is -$30.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a RDW butterfly?: The breakeven for the RDW butterfly priced on this page is roughly $13.80 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 RDW market-implied 1-standard-deviation expected move is approximately 34.63%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on RDW?: Butterflies on RDW are pinning bets - traders use them when they expect RDW 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 RDW implied volatility affect this butterfly?: RDW ATM IV is at 120.79% with IV rank near 83.56%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.