TKO Butterfly Strategy
TKO (TKO Group Holdings, Inc.), in the Communication Services sector, (Entertainment industry), listed on NYSE.
TKO Group Holdings, Inc. stands as a significant enterprise within the sports and entertainment industries. Its business activities are primarily organized into four core divisions: Media and Content, Live Events, Sponsorships, and Consumer Products Licensing. The company is responsible for creating a diverse range of content, including live spectacles, television programs, and both lengthy and concise video productions. This material is disseminated to audiences in approximately 170 countries through various channels such as traditional broadcast, subscription-based television, streaming services, and numerous digital and social media platforms. Furthermore, TKO leverages its brands through the merchandising of a wide array of goods, including video games, clothing, equipment, collectible trading cards, memorabilia, digital assets, and toys. It also facilitates sales of exclusive travel packages and event admission.
TKO (TKO Group Holdings, Inc.) trades in the Communication Services sector, specifically Entertainment, with a market capitalization of approximately $16.18B, a trailing P/E of 73.75, a beta of 0.62 versus the broader market, a 52-week range of 152.29-226.94, average daily share volume of 1.5M, a public-listing history dating back to 2023, approximately 4K full-time employees. These structural characteristics shape how TKO stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.62 indicates TKO has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. The trailing P/E of 73.75 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. TKO pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on TKO?
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 TKO snapshot
As of June 30, 2026, spot at $202.79, ATM IV 37.00%, IV rank 43.78%, expected move 10.61%. The butterfly on TKO 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 17-day expiry.
Why this butterfly structure on TKO specifically: TKO IV at 37.00% 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 10.61% (roughly $21.51 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated TKO expiries trade a higher absolute premium for lower per-day decay. Position sizing on TKO should anchor to the underlying notional of $202.79 per share and to the trader's directional view on TKO stock.
TKO butterfly setup
The TKO 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 TKO near $202.79, the first option leg uses a $195.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TKO chain at a 17-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 TKO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $195.00 | $11.30 |
| Sell 2 | Call | $200.00 | $8.20 |
| Buy 1 | Call | $210.00 | $3.55 |
TKO butterfly risk and reward
- Net Premium / Debit
- +$155.00
- Max Profit (per contract)
- $628.79
- Max Loss (per contract)
- -$345.00
- Breakeven(s)
- $206.55
- Risk / Reward Ratio
- 1.823
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.
TKO butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on TKO. 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 | -100.0% | +$155.00 |
| $44.85 | -77.9% | +$155.00 |
| $89.68 | -55.8% | +$155.00 |
| $134.52 | -33.7% | +$155.00 |
| $179.36 | -11.6% | +$155.00 |
| $224.19 | +10.6% | -$345.00 |
| $269.03 | +32.7% | -$345.00 |
| $313.87 | +54.8% | -$345.00 |
| $358.71 | +76.9% | -$345.00 |
| $403.54 | +99.0% | -$345.00 |
When traders use butterfly on TKO
Butterflies on TKO are pinning bets - traders use them when they expect TKO 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.
TKO thesis for this butterfly
The market-implied 1-standard-deviation range for TKO extends from approximately $181.28 on the downside to $224.30 on the upside. A TKO long call butterfly is a pinning play: it pays maximum at the middle strike if TKO settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TKO IV rank near 43.78% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on TKO should anchor more to the directional view and the expected-move geometry. As a Communication Services name, TKO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TKO-specific events.
TKO 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. TKO positions also carry Communication Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TKO alongside the broader basket even when TKO-specific fundamentals are unchanged. Always rebuild the position from current TKO chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on TKO?
- A butterfly on TKO is the butterfly strategy applied to TKO (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 TKO stock trading near $202.79, the strikes shown on this page are snapped to the nearest listed TKO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TKO 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 TKO butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 37.00%), the computed maximum profit is $628.79 per contract and the computed maximum loss is -$345.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TKO butterfly?
- The breakeven for the TKO butterfly priced on this page is roughly $206.55 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 TKO market-implied 1-standard-deviation expected move is approximately 10.61%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on TKO?
- Butterflies on TKO are pinning bets - traders use them when they expect TKO 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 TKO implied volatility affect this butterfly?
- TKO ATM IV is at 37.00% with IV rank near 43.78%, 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.