REX Butterfly Strategy
REX (REX American Resources Corporation), in the Basic Materials sector, (Chemicals - Specialty industry), listed on NYSE.
REX American Resources Corporation, along with its various subsidiaries, manufactures and distributes ethanol across the United States. The company's product portfolio extends to include corn, distillers grains, industrial-grade corn oil, gasoline, and natural gas. Notably, they also supply dry distillers grains with solubles, an important protein component used in animal feed. Established in 1980, the firm initially operated as REX Stores Corporation before adopting its present name, REX American Resources Corporation, in 2010. Its corporate base is situated in Dayton, Ohio.
REX (REX American Resources Corporation) trades in the Basic Materials sector, specifically Chemicals - Specialty, with a market capitalization of approximately $1.45B, a trailing P/E of 15.76, a beta of 0.61 versus the broader market, a 52-week range of 24.16-53.36, average daily share volume of 203K, a public-listing history dating back to 1984, approximately 122 full-time employees. These structural characteristics shape how REX stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.61 indicates REX has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a butterfly on REX?
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 REX snapshot
As of June 30, 2026, spot at $44.88, ATM IV 53.20%, IV rank 8.78%, expected move 15.25%. The butterfly on REX 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 17-day expiry.
Why this butterfly structure on REX specifically: REX IV at 53.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a REX butterfly, with a market-implied 1-standard-deviation move of approximately 15.25% (roughly $6.85 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated REX expiries trade a higher absolute premium for lower per-day decay. Position sizing on REX should anchor to the underlying notional of $44.88 per share and to the trader's directional view on REX stock.
REX butterfly setup
The REX 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 REX near $44.88, the first option leg uses a $42.64 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed REX chain at a 17-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 REX shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $42.64 | N/A |
| Sell 2 | Call | $44.88 | N/A |
| Buy 1 | Call | $47.12 | N/A |
REX butterfly risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
REX butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on REX. 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.
When traders use butterfly on REX
Butterflies on REX are pinning bets - traders use them when they expect REX 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.
REX thesis for this butterfly
The market-implied 1-standard-deviation range for REX extends from approximately $38.03 on the downside to $51.73 on the upside. A REX long call butterfly is a pinning play: it pays maximum at the middle strike if REX settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current REX IV rank near 8.78% 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 REX at 53.20%. As a Basic Materials name, REX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to REX-specific events.
REX 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. REX positions also carry Basic Materials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move REX alongside the broader basket even when REX-specific fundamentals are unchanged. Always rebuild the position from current REX chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on REX?
- A butterfly on REX is the butterfly strategy applied to REX (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 REX stock trading near $44.88, the strikes shown on this page are snapped to the nearest listed REX chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are REX 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 REX butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 53.20%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a REX butterfly?
- The breakeven for the REX butterfly priced on this page is no defined breakeven on the modeled curve 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 REX market-implied 1-standard-deviation expected move is approximately 15.25%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on REX?
- Butterflies on REX are pinning bets - traders use them when they expect REX 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 REX implied volatility affect this butterfly?
- REX ATM IV is at 53.20% with IV rank near 8.78%, 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.