SDRL Butterfly Strategy

SDRL (Seadrill Limited), in the Energy sector, (Oil & Gas Drilling industry), listed on NYSE.

Seadrill Limited provides offshore contract drilling services to the oil and gas industry worldwide. It operates in three segments: Harsh Environment, Floaters, and Jack-ups Rigs. The company owns and operates drillships, semi-submersible rigs, and jack-up rigs for operations in shallow and ultra-deep-water in benign and harsh environments. It offers operation support and management services to third parties, as well as related and non-related companies. As of April 8, 2022, the company owned a fleet of 21 offshore drilling units consisting of two harsh-environment rigs, two benign-environment semi-submersible rigs, six drill-ships, and 11 jack-up rigs. It serves oil super-majors, state-owned national oil companies, and independent oil and gas companies.

SDRL (Seadrill Limited) trades in the Energy sector, specifically Oil & Gas Drilling, with a market capitalization of approximately $3.13B, a beta of 1.41 versus the broader market, a 52-week range of 22.3-51.68, average daily share volume of 763K, a public-listing history dating back to 2022, approximately 3K full-time employees. These structural characteristics shape how SDRL stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.41 indicates SDRL 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 SDRL?

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 SDRL snapshot

As of May 15, 2026, spot at $52.58, ATM IV 43.90%, IV rank 15.45%, expected move 12.59%. The butterfly on SDRL 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 SDRL specifically: SDRL IV at 43.90% is on the cheap side of its 1-year range, which favors premium-buying structures like a SDRL butterfly, with a market-implied 1-standard-deviation move of approximately 12.59% (roughly $6.62 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 SDRL expiries trade a higher absolute premium for lower per-day decay. Position sizing on SDRL should anchor to the underlying notional of $52.58 per share and to the trader's directional view on SDRL stock.

SDRL butterfly setup

The SDRL 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 SDRL near $52.58, the first option leg uses a $49.95 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SDRL 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 SDRL shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$49.95	N/A
Sell 2	Call	$52.58	N/A
Buy 1	Call	$55.21	N/A

SDRL 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.

SDRL butterfly payoff curve

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

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

SDRL thesis for this butterfly

The market-implied 1-standard-deviation range for SDRL extends from approximately $45.96 on the downside to $59.20 on the upside. A SDRL long call butterfly is a pinning play: it pays maximum at the middle strike if SDRL settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SDRL IV rank near 15.45% 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 SDRL at 43.90%. As a Energy name, SDRL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SDRL-specific events.

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

Frequently asked questions

What is a butterfly on SDRL?: A butterfly on SDRL is the butterfly strategy applied to SDRL (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 SDRL stock trading near $52.58, the strikes shown on this page are snapped to the nearest listed SDRL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are SDRL 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 SDRL butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 43.90%), 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 SDRL butterfly?: The breakeven for the SDRL 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 SDRL market-implied 1-standard-deviation expected move is approximately 12.59%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on SDRL?: Butterflies on SDRL are pinning bets - traders use them when they expect SDRL 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 SDRL implied volatility affect this butterfly?: SDRL ATM IV is at 43.90% with IV rank near 15.45%, 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.