How are TKR 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 TKR butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 37.40%), the computed maximum profit is $391.89 per contract and the computed maximum loss is -$85.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a TKR butterfly?

The breakeven for the TKR butterfly priced on this page is roughly $110.85 and $119.15 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 TKR market-implied 1-standard-deviation expected move is approximately 10.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current TKR implied volatility affect this butterfly?

TKR ATM IV is at 37.40% with IV rank near 5.03%, 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.

TKR Butterfly Strategy

TKR (The Timken Company), in the Industrials sector, (Manufacturing - Tools & Accessories industry), listed on NYSE.

The Timken Company designs, manufactures, and manages engineered bearings and power transmission products worldwide. It operates in two segments, Mobile Industries and Process Industries. The Mobile Industries segment offers a portfolio of bearings, seals, and lubrication devices and systems, as well as power transmission components, engineered chains, augers, belts, couplings, clutches, brakes, and related products and maintenance services to original equipment manufacturers (OEMs) and end-users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment, and power sports markets; and on-highway vehicles, including passenger cars, light trucks, and medium- and heavy-duty trucks, as well as rail cars and locomotives. It also provides power transmission systems and flight-critical components for civil and military aircraft, which include bearings, rotor-head assemblies, helicopter transmission systems, turbine engine components, gears, and housings. This segment sells its parts through a network of authorized automotive and heavy-truck distributors to individual end-users, equipment owners, operators, and maintenance shops. The Process Industries segment provides industrial bearings and assemblies; power transmission components, such as gears and gearboxes; and linear motion products, couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries.

TKR (The Timken Company) trades in the Industrials sector, specifically Manufacturing - Tools & Accessories, with a market capitalization of approximately $8.04B, a trailing P/E of 26.12, a beta of 1.18 versus the broader market, a 52-week range of 67.14-123.67, average daily share volume of 787K, a public-listing history dating back to 1922, approximately 19K full-time employees. These structural characteristics shape how TKR stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.18 places TKR roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. TKR pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on TKR?

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 TKR snapshot

As of May 15, 2026, spot at $114.65, ATM IV 37.40%, IV rank 5.03%, expected move 10.72%. The butterfly on TKR 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 TKR specifically: TKR IV at 37.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a TKR butterfly, with a market-implied 1-standard-deviation move of approximately 10.72% (roughly $12.29 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 TKR expiries trade a higher absolute premium for lower per-day decay. Position sizing on TKR should anchor to the underlying notional of $114.65 per share and to the trader's directional view on TKR stock.

TKR butterfly setup

The TKR 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 TKR near $114.65, the first option leg uses a $110.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TKR 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 TKR shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$110.00	$7.75
Sell 2	Call	$115.00	$4.90
Buy 1	Call	$120.00	$2.90

TKR butterfly risk and reward

Net Premium / Debit: -$85.00
Max Profit (per contract): $391.89
Max Loss (per contract): -$85.00
Breakeven(s): $110.85, $119.15
Risk / Reward Ratio: 4.610

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.

TKR butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on TKR. 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%	-$85.00
$25.36	-77.9%	-$85.00
$50.71	-55.8%	-$85.00
$76.06	-33.7%	-$85.00
$101.40	-11.6%	-$85.00
$126.75	+10.6%	-$85.00
$152.10	+32.7%	-$85.00
$177.45	+54.8%	-$85.00
$202.80	+76.9%	-$85.00
$228.15	+99.0%	-$85.00

When traders use butterfly on TKR

Butterflies on TKR are pinning bets - traders use them when they expect TKR 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.

TKR thesis for this butterfly

The market-implied 1-standard-deviation range for TKR extends from approximately $102.36 on the downside to $126.94 on the upside. A TKR long call butterfly is a pinning play: it pays maximum at the middle strike if TKR settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TKR IV rank near 5.03% 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 TKR at 37.40%. As a Industrials name, TKR options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TKR-specific events.

TKR 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. TKR positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TKR alongside the broader basket even when TKR-specific fundamentals are unchanged. Always rebuild the position from current TKR chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on TKR?: A butterfly on TKR is the butterfly strategy applied to TKR (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 TKR stock trading near $114.65, the strikes shown on this page are snapped to the nearest listed TKR chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are TKR 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 TKR butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 37.40%), the computed maximum profit is $391.89 per contract and the computed maximum loss is -$85.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a TKR butterfly?: The breakeven for the TKR butterfly priced on this page is roughly $110.85 and $119.15 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 TKR market-implied 1-standard-deviation expected move is approximately 10.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on TKR?: Butterflies on TKR are pinning bets - traders use them when they expect TKR 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 TKR implied volatility affect this butterfly?: TKR ATM IV is at 37.40% with IV rank near 5.03%, 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.