RH Butterfly Strategy
RH (Rh), in the Consumer Cyclical sector, (Specialty Retail industry), listed on NYSE.
RH, along with its various associated businesses, functions as a prominent retailer specializing in home furnishings. Its extensive product portfolio spans categories such as furniture, lighting, textiles, bathware, decor, outdoor and garden essentials, and specialized furnishings for children and teens. The company reaches its clientele through diverse sales channels. These include its distinctive retail galleries, the curated 'Source Books' catalogs, and an extensive online presence via rh.com, rhbabyandchild.com, rhteen.com, rhmodern.com, and waterworks.com. As of January 29, 2022, RH maintained a significant physical footprint, comprising 67 RH Galleries and 38 RH outlet stores spread across 30 U.S. states, the District of Columbia, and Canada. Furthermore, it managed 14 Waterworks showrooms throughout the United States and the United Kingdom.
RH (Rh) trades in the Consumer Cyclical sector, specifically Specialty Retail, with a market capitalization of approximately $3.41B, a trailing P/E of 32.96, a beta of 1.87 versus the broader market, a 52-week range of 106.3-257, average daily share volume of 1.1M, a public-listing history dating back to 2012, approximately 7K full-time employees. These structural characteristics shape how RH stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.87 indicates RH 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 RH?
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.
RH snapshot
As of August 14, 2026, spot at $181.44, ATM IV 75.40%, IV rank 47.03%, expected move 21.62%. The butterfly on RH 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 28-day expiry.
Why this butterfly structure on RH specifically: RH IV at 75.40% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 21.62% (roughly $39.22 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 RH expiries trade a higher absolute premium for lower per-day decay. Position sizing on RH should anchor to the underlying notional of $181.44 per share and to the trader's directional view on RH stock.
RH butterfly setup
The RH 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 RH at $181.44 on that close, the first option leg uses a $170.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RH 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 RH shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $170.00 | $21.30 |
| Sell 2 | Call | $180.00 | $16.30 |
| Buy 1 | Call | $190.00 | $11.80 |
RH butterfly risk and reward
- Net Premium / Debit
- -$50.00
- Max Profit (per contract)
- $896.67
- Max Loss (per contract)
- -$50.00
- Breakeven(s)
- $170.24, $189.50
- Risk / Reward Ratio
- 17.933
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.
RH butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on RH. 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% | -$50.00 |
| $40.13 | -77.9% | -$50.00 |
| $80.24 | -55.8% | -$50.00 |
| $120.36 | -33.7% | -$50.00 |
| $160.48 | -11.6% | -$50.00 |
| $200.59 | +10.6% | -$50.00 |
| $240.71 | +32.7% | -$50.00 |
| $280.82 | +54.8% | -$50.00 |
| $320.94 | +76.9% | -$50.00 |
| $361.06 | +99.0% | -$50.00 |
When traders use butterfly on RH
Butterflies on RH are pinning bets - traders use them when they expect RH 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.
RH thesis for this butterfly
The market-implied 1-standard-deviation range for RH extends from approximately $142.22 on the downside to $220.66 on the upside. A RH long call butterfly is a pinning play: it pays maximum at the middle strike if RH settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current RH IV rank near 47.03% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on RH should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, RH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RH-specific events.
RH 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. RH positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RH alongside the broader basket even when RH-specific fundamentals are unchanged. Always rebuild the position from current RH chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on RH?
- A butterfly on RH is the butterfly strategy applied to RH (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 RH stock at $181.44 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed RH chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are RH 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 RH butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 75.40%), the computed maximum profit is $896.67 per contract and the computed maximum loss is -$50.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RH butterfly?
- The breakeven for the RH butterfly priced on this page is roughly $170.24 and $189.50 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 RH market-implied 1-standard-deviation expected move in the same options snapshot is approximately 21.62%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on RH?
- Butterflies on RH are pinning bets - traders use them when they expect RH 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 RH implied volatility affect this butterfly?
- RH ATM IV is at 75.40% with IV rank near 47.03%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.