TXT Butterfly Strategy
TXT (Textron Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.
Textron Inc. operates in the aircraft, defense, industrial, and finance businesses. The company's Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and offers maintenance, inspection, and repair services, as well as sells commercial parts. Its Bell segment supplies military and commercial helicopters, tiltrotor aircrafts, and related spare parts and services. The company's Textron Systems segment offers unmanned aircraft systems, electronic systems and solutions, advanced marine crafts, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, and armored and specialty vehicles. Its Industrial segment offers blow-molded plastic fuel systems, including conventional plastic fuel tanks and pressurized fuel tanks for hybrid vehicle applications, clear-vision systems, and plastic tanks for catalytic reduction systems primarily to automobile original equipment manufacturers; and golf cars, off-road utility vehicles, recreational side-by-side and all-terrain vehicles, snowmobiles, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment, and turf-care vehicles to golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users. The company's Finance segment provides financing services to purchase new and pre-owned aircraft and bell helicopters.
TXT (Textron Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $15.89B, a trailing P/E of 17.24, a beta of 0.93 versus the broader market, a 52-week range of 72-101.57, average daily share volume of 1.5M, a public-listing history dating back to 1947, approximately 34K full-time employees. These structural characteristics shape how TXT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.93 places TXT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. TXT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on TXT?
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 TXT snapshot
As of May 15, 2026, spot at $88.97, ATM IV 26.00%, IV rank 43.33%, expected move 7.45%. The butterfly on TXT 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 TXT specifically: TXT IV at 26.00% 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 7.45% (roughly $6.63 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 TXT expiries trade a higher absolute premium for lower per-day decay. Position sizing on TXT should anchor to the underlying notional of $88.97 per share and to the trader's directional view on TXT stock.
TXT butterfly setup
The TXT 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 TXT near $88.97, the first option leg uses a $85.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TXT 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 TXT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $85.00 | $5.85 |
| Sell 2 | Call | $90.00 | $2.70 |
| Buy 1 | Call | $92.50 | $1.70 |
TXT butterfly risk and reward
- Net Premium / Debit
- -$215.00
- Max Profit (per contract)
- $253.38
- Max Loss (per contract)
- -$215.00
- Breakeven(s)
- $87.15
- Risk / Reward Ratio
- 1.179
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.
TXT butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on TXT. 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% | -$215.00 |
| $19.68 | -77.9% | -$215.00 |
| $39.35 | -55.8% | -$215.00 |
| $59.02 | -33.7% | -$215.00 |
| $78.69 | -11.6% | -$215.00 |
| $98.36 | +10.6% | +$35.00 |
| $118.03 | +32.7% | +$35.00 |
| $137.70 | +54.8% | +$35.00 |
| $157.38 | +76.9% | +$35.00 |
| $177.05 | +99.0% | +$35.00 |
When traders use butterfly on TXT
Butterflies on TXT are pinning bets - traders use them when they expect TXT 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.
TXT thesis for this butterfly
The market-implied 1-standard-deviation range for TXT extends from approximately $82.34 on the downside to $95.60 on the upside. A TXT long call butterfly is a pinning play: it pays maximum at the middle strike if TXT settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TXT IV rank near 43.33% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on TXT should anchor more to the directional view and the expected-move geometry. As a Industrials name, TXT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TXT-specific events.
TXT 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. TXT positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TXT alongside the broader basket even when TXT-specific fundamentals are unchanged. Always rebuild the position from current TXT chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on TXT?
- A butterfly on TXT is the butterfly strategy applied to TXT (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 TXT stock trading near $88.97, the strikes shown on this page are snapped to the nearest listed TXT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TXT 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 TXT butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 26.00%), the computed maximum profit is $253.38 per contract and the computed maximum loss is -$215.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TXT butterfly?
- The breakeven for the TXT butterfly priced on this page is roughly $87.15 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 TXT market-implied 1-standard-deviation expected move is approximately 7.45%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on TXT?
- Butterflies on TXT are pinning bets - traders use them when they expect TXT 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 TXT implied volatility affect this butterfly?
- TXT ATM IV is at 26.00% with IV rank near 43.33%, 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.