SRE Butterfly Strategy
SRE (Sempra), in the Utilities sector, (Diversified Utilities industry), listed on NYSE.
Sempra operates as an energy-services holding company in the United States and internationally. The company's San Diego Gas & Electric Company segment provides electric services; and supplies natural gas. It offers electric services to approximately 3.6 million population and natural gas services to approximately 3.3 million population that covers 4,100 square miles. Its Southern California Gas Company segment owns and operates a natural gas distribution, transmission, and storage system that supplies natural gas to a population of approximately 22 million covering an area of 24,000 square miles. The company's Sempra Texas Utilities segment engages in the regulated transmission and distribution of electricity serving 3.8 million homes and businesses, and operation of 140,000 miles of transmission and distribution lines. Its transmission system includes 18,249 circuit miles of transmission lines, a total of 1,174 transmission and distribution substations, and interconnection to 130 third-party generation facilities totaling 45,403 megawatts.
SRE (Sempra) trades in the Utilities sector, specifically Diversified Utilities, with a market capitalization of approximately $59.93B, a trailing P/E of 28.95, a beta of 0.60 versus the broader market, a 52-week range of 73.06-101.04, average daily share volume of 3.5M, a public-listing history dating back to 1998, approximately 17K full-time employees. These structural characteristics shape how SRE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.60 indicates SRE has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. SRE pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on SRE?
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 SRE snapshot
As of May 15, 2026, spot at $90.48, ATM IV 23.10%, IV rank 47.71%, expected move 6.62%. The butterfly on SRE 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 SRE specifically: SRE IV at 23.10% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 6.62% (roughly $5.99 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 SRE expiries trade a higher absolute premium for lower per-day decay. Position sizing on SRE should anchor to the underlying notional of $90.48 per share and to the trader's directional view on SRE stock.
SRE butterfly setup
The SRE 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 SRE near $90.48, the first option leg uses a $85.96 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SRE 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 SRE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $85.96 | N/A |
| Sell 2 | Call | $90.48 | N/A |
| Buy 1 | Call | $95.00 | N/A |
SRE 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.
SRE butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on SRE. 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 SRE
Butterflies on SRE are pinning bets - traders use them when they expect SRE 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.
SRE thesis for this butterfly
The market-implied 1-standard-deviation range for SRE extends from approximately $84.49 on the downside to $96.47 on the upside. A SRE long call butterfly is a pinning play: it pays maximum at the middle strike if SRE settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SRE IV rank near 47.71% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on SRE should anchor more to the directional view and the expected-move geometry. As a Utilities name, SRE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SRE-specific events.
SRE 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. SRE positions also carry Utilities sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SRE alongside the broader basket even when SRE-specific fundamentals are unchanged. Always rebuild the position from current SRE chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on SRE?
- A butterfly on SRE is the butterfly strategy applied to SRE (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 SRE stock trading near $90.48, the strikes shown on this page are snapped to the nearest listed SRE chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SRE 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 SRE butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 23.10%), 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 SRE butterfly?
- The breakeven for the SRE 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 SRE market-implied 1-standard-deviation expected move is approximately 6.62%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on SRE?
- Butterflies on SRE are pinning bets - traders use them when they expect SRE 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 SRE implied volatility affect this butterfly?
- SRE ATM IV is at 23.10% with IV rank near 47.71%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.