SMSI Butterfly Strategy
SMSI (Smith Micro Software, Inc.), in the Technology sector, (Software - Application industry), listed on NASDAQ.
Smith Micro Software, Inc. develops and sells software to enhance the mobile experience to wireless and cable service providers worldwide. It offers SafePath Family, SafePath IoT, and SafePath Home product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service providers deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language Voice-to-Text transcription messaging. It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and retailers; and technical support and customer services. The company was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.
SMSI (Smith Micro Software, Inc.) trades in the Technology sector, specifically Software - Application, with a market capitalization of approximately $17.2M, a beta of 0.67 versus the broader market, a 52-week range of 0.41-1.3, average daily share volume of 339K, a public-listing history dating back to 1995, approximately 164 full-time employees. These structural characteristics shape how SMSI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.67 indicates SMSI 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 SMSI?
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 SMSI snapshot
As of May 15, 2026, spot at $0.84, ATM IV 23.80%, IV rank 1.31%, expected move 6.82%. The butterfly on SMSI 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 SMSI specifically: SMSI IV at 23.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a SMSI butterfly, with a market-implied 1-standard-deviation move of approximately 6.82% (roughly $0.06 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 SMSI expiries trade a higher absolute premium for lower per-day decay. Position sizing on SMSI should anchor to the underlying notional of $0.84 per share and to the trader's directional view on SMSI stock.
SMSI butterfly setup
The SMSI 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 SMSI near $0.84, the first option leg uses a $0.80 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SMSI 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 SMSI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $0.80 | N/A |
| Sell 2 | Call | $0.84 | N/A |
| Buy 1 | Call | $0.88 | N/A |
SMSI 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.
SMSI butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on SMSI. 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 SMSI
Butterflies on SMSI are pinning bets - traders use them when they expect SMSI 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.
SMSI thesis for this butterfly
The market-implied 1-standard-deviation range for SMSI extends from approximately $0.78 on the downside to $0.90 on the upside. A SMSI long call butterfly is a pinning play: it pays maximum at the middle strike if SMSI settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SMSI IV rank near 1.31% 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 SMSI at 23.80%. As a Technology name, SMSI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SMSI-specific events.
SMSI 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. SMSI positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SMSI alongside the broader basket even when SMSI-specific fundamentals are unchanged. Always rebuild the position from current SMSI chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on SMSI?
- A butterfly on SMSI is the butterfly strategy applied to SMSI (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 SMSI stock trading near $0.84, the strikes shown on this page are snapped to the nearest listed SMSI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SMSI 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 SMSI butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 23.80%), 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 SMSI butterfly?
- The breakeven for the SMSI 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 SMSI market-implied 1-standard-deviation expected move is approximately 6.82%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on SMSI?
- Butterflies on SMSI are pinning bets - traders use them when they expect SMSI 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 SMSI implied volatility affect this butterfly?
- SMSI ATM IV is at 23.80% with IV rank near 1.31%, 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.