SKYE Butterfly Strategy
SKYE (Skye Bioscience, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Skye Bioscience, Inc., a biopharmaceutical company, discovers, develops, and commercializes cannabinoid-based molecules for the treatment of infectious diseases. The company's lead product candidate is SBI-100, which is in Phase I trials for the treatment of glaucoma and ocular hypertension. It is also developing SBI-200 that is in preclinical trials to treat and manage various eye diseases, including uveitis, dry eye syndrome, macular degeneration and diabetic retinopathy. The company was formerly known as Emerald Bioscience, Inc. and changed its name to Skye Bioscience, Inc. in January 2021. Skye Bioscience, Inc. was founded in 2012 and is headquartered in San Diego, California.
SKYE (Skye Bioscience, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $28.8M, a beta of 3.02 versus the broader market, a 52-week range of 0.566-5.75, average daily share volume of 525K, a public-listing history dating back to 2014, approximately 16 full-time employees. These structural characteristics shape how SKYE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 3.02 indicates SKYE 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 SKYE?
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 SKYE snapshot
As of May 15, 2026, spot at $0.82, ATM IV 20.60%, IV rank 0.70%, expected move 5.91%. The butterfly on SKYE 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 SKYE specifically: SKYE IV at 20.60% is on the cheap side of its 1-year range, which favors premium-buying structures like a SKYE butterfly, with a market-implied 1-standard-deviation move of approximately 5.91% (roughly $0.05 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 SKYE expiries trade a higher absolute premium for lower per-day decay. Position sizing on SKYE should anchor to the underlying notional of $0.82 per share and to the trader's directional view on SKYE stock.
SKYE butterfly setup
The SKYE 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 SKYE near $0.82, the first option leg uses a $0.78 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SKYE 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 SKYE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $0.78 | N/A |
| Sell 2 | Call | $0.82 | N/A |
| Buy 1 | Call | $0.86 | N/A |
SKYE 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.
SKYE butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on SKYE. 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 SKYE
Butterflies on SKYE are pinning bets - traders use them when they expect SKYE 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.
SKYE thesis for this butterfly
The market-implied 1-standard-deviation range for SKYE extends from approximately $0.77 on the downside to $0.87 on the upside. A SKYE long call butterfly is a pinning play: it pays maximum at the middle strike if SKYE settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SKYE IV rank near 0.70% 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 SKYE at 20.60%. As a Healthcare name, SKYE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SKYE-specific events.
SKYE 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. SKYE positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SKYE alongside the broader basket even when SKYE-specific fundamentals are unchanged. Always rebuild the position from current SKYE chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on SKYE?
- A butterfly on SKYE is the butterfly strategy applied to SKYE (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 SKYE stock trading near $0.82, the strikes shown on this page are snapped to the nearest listed SKYE chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SKYE 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 SKYE butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 20.60%), 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 SKYE butterfly?
- The breakeven for the SKYE 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 SKYE market-implied 1-standard-deviation expected move is approximately 5.91%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on SKYE?
- Butterflies on SKYE are pinning bets - traders use them when they expect SKYE 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 SKYE implied volatility affect this butterfly?
- SKYE ATM IV is at 20.60% with IV rank near 0.70%, 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.