RRX Butterfly Strategy
RRX (Regal Rexnord Corporation), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Regal Rexnord Corporation, together with its subsidiaries, designs, manufactures, and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. It operates through four segments: Commercial Systems, Industrial Systems, Climate Solutions, and Motion Control Solutions. The Commercial Systems segment provides AC and DC motors, electronic variable speed controls, fans, blowers, and precision stator and rotor kits. The Industrial Systems segment offers AC motors for industrial applications; electric alternators for prime and standby power applications to data centers, distributed energy, microgrid, rental marine, agriculture, healthcare, mobile, and defense markets; and switchgear for healthcare, government, and waste water applications, as well as residential, commercial, and industrial applications. The Climate Solutions segment provides fractional motors, electronic variable speed controls, and blowers for use in a residential and light commercial air moving applications; and fractional horsepower motors and blowers for white goods, water heating equipment, small pumps, compressors, and fans. The Motion Control Solutions segment offers bearings; conveyors; disc, gear, grid, elastomeric, and torsionally soft couplings; mechanical power transmission drives and components; worm gearing, shaft configuration, helical, bevel, helical bevel, worm, hypoid, and spur gearing products; and aerospace components.
RRX (Regal Rexnord Corporation) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $13.69B, a trailing P/E of 47.73, a beta of 1.13 versus the broader market, a 52-week range of 127.96-236.35, average daily share volume of 1.1M, a public-listing history dating back to 1980, approximately 30K full-time employees. These structural characteristics shape how RRX stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.13 places RRX roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 47.73 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. RRX pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on RRX?
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 RRX snapshot
As of May 15, 2026, spot at $197.31, ATM IV 48.20%, IV rank 28.36%, expected move 13.82%. The butterfly on RRX 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 RRX specifically: RRX IV at 48.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a RRX butterfly, with a market-implied 1-standard-deviation move of approximately 13.82% (roughly $27.27 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 RRX expiries trade a higher absolute premium for lower per-day decay. Position sizing on RRX should anchor to the underlying notional of $197.31 per share and to the trader's directional view on RRX stock.
RRX butterfly setup
The RRX 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 RRX near $197.31, the first option leg uses a $185.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RRX 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 RRX shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $185.00 | $18.65 |
| Sell 2 | Call | $195.00 | $12.65 |
| Buy 1 | Call | $210.00 | $6.55 |
RRX butterfly risk and reward
- Net Premium / Debit
- +$10.00
- Max Profit (per contract)
- $944.06
- Max Loss (per contract)
- -$490.00
- Breakeven(s)
- $205.10
- Risk / Reward Ratio
- 1.927
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.
RRX butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on RRX. 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% | +$10.00 |
| $43.64 | -77.9% | +$10.00 |
| $87.26 | -55.8% | +$10.00 |
| $130.89 | -33.7% | +$10.00 |
| $174.51 | -11.6% | +$10.00 |
| $218.14 | +10.6% | -$490.00 |
| $261.76 | +32.7% | -$490.00 |
| $305.39 | +54.8% | -$490.00 |
| $349.01 | +76.9% | -$490.00 |
| $392.64 | +99.0% | -$490.00 |
When traders use butterfly on RRX
Butterflies on RRX are pinning bets - traders use them when they expect RRX 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.
RRX thesis for this butterfly
The market-implied 1-standard-deviation range for RRX extends from approximately $170.04 on the downside to $224.58 on the upside. A RRX long call butterfly is a pinning play: it pays maximum at the middle strike if RRX settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current RRX IV rank near 28.36% 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 RRX at 48.20%. As a Industrials name, RRX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RRX-specific events.
RRX 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. RRX positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RRX alongside the broader basket even when RRX-specific fundamentals are unchanged. Always rebuild the position from current RRX chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on RRX?
- A butterfly on RRX is the butterfly strategy applied to RRX (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 RRX stock trading near $197.31, the strikes shown on this page are snapped to the nearest listed RRX chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RRX 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 RRX butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 48.20%), the computed maximum profit is $944.06 per contract and the computed maximum loss is -$490.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RRX butterfly?
- The breakeven for the RRX butterfly priced on this page is roughly $205.10 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 RRX market-implied 1-standard-deviation expected move is approximately 13.82%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on RRX?
- Butterflies on RRX are pinning bets - traders use them when they expect RRX 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 RRX implied volatility affect this butterfly?
- RRX ATM IV is at 48.20% with IV rank near 28.36%, 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.