How are RIG 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 RIG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 49.32%), the computed maximum profit is $21.50 per contract and the computed maximum loss is -$28.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a RIG butterfly?

The breakeven for the RIG butterfly priced on this page is roughly $4.79 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 RIG market-implied 1-standard-deviation expected move is approximately 14.14%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current RIG implied volatility affect this butterfly?

RIG ATM IV is at 49.32% with IV rank near 12.15%, 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.

RIG Butterfly Strategy

RIG (Transocean Ltd.), in the Energy sector, (Oil & Gas Drilling industry), listed on NYSE.

Transocean Ltd., in conjunction with its subsidiaries, offers specialized contract drilling services for oil and natural gas wells throughout the world. The company provides mobile offshore drilling rigs, all necessary equipment, and skilled workforces to carry out these drilling operations. As of February 14, 2022, Transocean oversaw and held partial ownership interests in a fleet of 37 mobile offshore drilling units. This fleet notably included 27 ultra-deepwater floaters and 10 floaters built to withstand harsh environmental conditions. Its clientele is varied, consisting of major integrated energy corporations, state-owned or government-controlled oil enterprises, and numerous independent energy companies. Established in 1926, Transocean's corporate headquarters are located in Steinhausen, Switzerland.

RIG (Transocean Ltd.) trades in the Energy sector, specifically Oil & Gas Drilling, with a market capitalization of approximately $4.62B, a beta of 1.27 versus the broader market, a 52-week range of 2.51-7.66, average daily share volume of 33.4M, a public-listing history dating back to 1993, approximately 5K full-time employees. These structural characteristics shape how RIG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.27 places RIG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a butterfly on RIG?

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 RIG snapshot

As of June 30, 2026, spot at $4.91, ATM IV 49.32%, IV rank 12.15%, expected move 14.14%. The butterfly on RIG 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 31-day expiry.

Why this butterfly structure on RIG specifically: RIG IV at 49.32% is on the cheap side of its 1-year range, which favors premium-buying structures like a RIG butterfly, with a market-implied 1-standard-deviation move of approximately 14.14% (roughly $0.69 on the underlying). The 31-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated RIG expiries trade a higher absolute premium for lower per-day decay. Position sizing on RIG should anchor to the underlying notional of $4.91 per share and to the trader's directional view on RIG stock.

RIG butterfly setup

The RIG 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 RIG near $4.91, the first option leg uses a $4.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RIG chain at a 31-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 RIG shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$4.50	$0.55
Sell 2	Call	$5.00	$0.26
Buy 1	Call	$5.00	$0.26

RIG butterfly risk and reward

Net Premium / Debit: -$28.50
Max Profit (per contract): $21.50
Max Loss (per contract): -$28.50
Breakeven(s): $4.79
Risk / Reward Ratio: 0.754

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.

RIG butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on RIG. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-99.8%	-$28.50
$1.09	-77.7%	-$28.50
$2.18	-55.6%	-$28.50
$3.26	-33.5%	-$28.50
$4.35	-11.4%	-$28.50
$5.43	+10.6%	+$21.50
$6.52	+32.7%	+$21.50
$7.60	+54.8%	+$21.50
$8.69	+76.9%	+$21.50
$9.77	+99.0%	+$21.50

When traders use butterfly on RIG

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

RIG thesis for this butterfly

The market-implied 1-standard-deviation range for RIG extends from approximately $4.22 on the downside to $5.60 on the upside. A RIG long call butterfly is a pinning play: it pays maximum at the middle strike if RIG settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current RIG IV rank near 12.15% 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 RIG at 49.32%. As a Energy name, RIG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RIG-specific events.

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

Frequently asked questions

What is a butterfly on RIG?: A butterfly on RIG is the butterfly strategy applied to RIG (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 RIG stock trading near $4.91, the strikes shown on this page are snapped to the nearest listed RIG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are RIG 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 RIG butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 49.32%), the computed maximum profit is $21.50 per contract and the computed maximum loss is -$28.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a RIG butterfly?: The breakeven for the RIG butterfly priced on this page is roughly $4.79 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 RIG market-implied 1-standard-deviation expected move is approximately 14.14%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on RIG?: Butterflies on RIG are pinning bets - traders use them when they expect RIG 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 RIG implied volatility affect this butterfly?: RIG ATM IV is at 49.32% with IV rank near 12.15%, 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.