SMMT Butterfly Strategy
SMMT (Summit Therapeutics Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Summit Therapeutics Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines to treat infectious diseases in the United States and Latin America. It conducts clinical programs focusing on Clostridioides difficile infection (CDI). The company's lead product candidate is ridinilazole, an orally administered small molecule antibiotic that is in Phase III clinical trials for the treatment of CDI. It also offers SMT-738, for combating multidrug resistant infections primarily carbapenem-resistant Enterobacteriaceae infections; and DDS-04 series for the potential treatment of infections caused by the Enterobacteriaceae. The company was founded in 2003 and is based in Cambridge, Massachusetts.
SMMT (Summit Therapeutics Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $14.57B, a beta of -1.26 versus the broader market, a 52-week range of 13.83-30.98, average daily share volume of 3.4M, a public-listing history dating back to 2015, approximately 159 full-time employees. These structural characteristics shape how SMMT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of -1.26 indicates SMMT has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a butterfly on SMMT?
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 SMMT snapshot
As of May 15, 2026, spot at $16.87, ATM IV 155.30%, IV rank 92.31%, expected move 44.52%. The butterfly on SMMT 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 28-day expiry.
Why this butterfly structure on SMMT specifically: SMMT IV at 155.30% is rich versus its 1-year range, which makes a premium-buying SMMT butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 44.52% (roughly $7.51 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 SMMT expiries trade a higher absolute premium for lower per-day decay. Position sizing on SMMT should anchor to the underlying notional of $16.87 per share and to the trader's directional view on SMMT stock.
SMMT butterfly setup
The SMMT 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 SMMT near $16.87, the first option leg uses a $16.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SMMT 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 SMMT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $16.00 | $3.60 |
| Sell 2 | Call | $17.00 | $2.98 |
| Buy 1 | Call | $18.00 | $2.30 |
SMMT butterfly risk and reward
- Net Premium / Debit
- +$5.00
- Max Profit (per contract)
- $100.97
- Max Loss (per contract)
- $5.00
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- 20.195
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.
SMMT butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on SMMT. 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 | -99.9% | +$5.00 |
| $3.74 | -77.8% | +$5.00 |
| $7.47 | -55.7% | +$5.00 |
| $11.20 | -33.6% | +$5.00 |
| $14.93 | -11.5% | +$5.00 |
| $18.65 | +10.6% | +$5.00 |
| $22.38 | +32.7% | +$5.00 |
| $26.11 | +54.8% | +$5.00 |
| $29.84 | +76.9% | +$5.00 |
| $33.57 | +99.0% | +$5.00 |
When traders use butterfly on SMMT
Butterflies on SMMT are pinning bets - traders use them when they expect SMMT 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.
SMMT thesis for this butterfly
The market-implied 1-standard-deviation range for SMMT extends from approximately $9.36 on the downside to $24.38 on the upside. A SMMT long call butterfly is a pinning play: it pays maximum at the middle strike if SMMT settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SMMT IV rank near 92.31% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on SMMT at 155.30%. As a Healthcare name, SMMT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SMMT-specific events.
SMMT 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. SMMT positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SMMT alongside the broader basket even when SMMT-specific fundamentals are unchanged. Always rebuild the position from current SMMT chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on SMMT?
- A butterfly on SMMT is the butterfly strategy applied to SMMT (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 SMMT stock trading near $16.87, the strikes shown on this page are snapped to the nearest listed SMMT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SMMT 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 SMMT butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 155.30%), the computed maximum profit is $100.97 per contract and the computed maximum loss is $5.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a SMMT butterfly?
- The breakeven for the SMMT 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 SMMT market-implied 1-standard-deviation expected move is approximately 44.52%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on SMMT?
- Butterflies on SMMT are pinning bets - traders use them when they expect SMMT 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 SMMT implied volatility affect this butterfly?
- SMMT ATM IV is at 155.30% with IV rank near 92.31%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.