ULTA Butterfly Strategy
ULTA (Ulta Beauty, Inc.), in the Consumer Cyclical sector, (Specialty Retail industry), listed on NASDAQ.
Ulta Beauty, Inc. operates as a retailer of beauty products in the United States. The company's stores offer cosmetics, fragrances, skincare and haircare products, bath and body products, and salon styling tools; professional hair products; salon services, including hair, skin, makeup, and brow services; and nail services. It also provides its private label products, such as the Ulta Beauty Collection branded cosmetics, skincare, and bath products, as well as Ulta Beauty branded products; and the Ulta Beauty branded gifts. As of March 10, 2022, the company operated 1,308 retail stores across 50 states. It also distributes its products through its website ulta.com; and mobile applications. The company was formerly known as Ulta Salon, Cosmetics & Fragrance, Inc. and changed its name to Ulta Beauty, Inc. in January 2017.
ULTA (Ulta Beauty, Inc.) trades in the Consumer Cyclical sector, specifically Specialty Retail, with a market capitalization of approximately $21.52B, a trailing P/E of 19.13, a beta of 0.89 versus the broader market, a 52-week range of 402.5-714.97, average daily share volume of 715K, a public-listing history dating back to 2007, approximately 20K full-time employees. These structural characteristics shape how ULTA stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.89 places ULTA roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a butterfly on ULTA?
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 ULTA snapshot
As of May 15, 2026, spot at $493.77, ATM IV 51.36%, IV rank 99.54%, expected move 14.72%. The butterfly on ULTA 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 28-day expiry.
Why this butterfly structure on ULTA specifically: ULTA IV at 51.36% is rich versus its 1-year range, which makes a premium-buying ULTA butterfly relatively expensive in absolute-cost terms, with a market-implied 1-standard-deviation move of approximately 14.72% (roughly $72.71 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ULTA expiries trade a higher absolute premium for lower per-day decay. Position sizing on ULTA should anchor to the underlying notional of $493.77 per share and to the trader's directional view on ULTA stock.
ULTA butterfly setup
The ULTA 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 ULTA near $493.77, the first option leg uses a $470.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ULTA chain at a 28-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 ULTA shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $470.00 | $43.25 |
| Sell 2 | Call | $495.00 | $29.35 |
| Buy 1 | Call | $520.00 | $18.65 |
ULTA butterfly risk and reward
- Net Premium / Debit
- -$320.00
- Max Profit (per contract)
- $2,054.38
- Max Loss (per contract)
- -$320.00
- Breakeven(s)
- $473.20, $516.99
- Risk / Reward Ratio
- 6.420
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.
ULTA butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ULTA. 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% | -$320.00 |
| $109.18 | -77.9% | -$320.00 |
| $218.36 | -55.8% | -$320.00 |
| $327.53 | -33.7% | -$320.00 |
| $436.71 | -11.6% | -$320.00 |
| $545.88 | +10.6% | -$320.00 |
| $655.06 | +32.7% | -$320.00 |
| $764.23 | +54.8% | -$320.00 |
| $873.40 | +76.9% | -$320.00 |
| $982.58 | +99.0% | -$320.00 |
When traders use butterfly on ULTA
Butterflies on ULTA are pinning bets - traders use them when they expect ULTA 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.
ULTA thesis for this butterfly
The market-implied 1-standard-deviation range for ULTA extends from approximately $421.06 on the downside to $566.48 on the upside. A ULTA long call butterfly is a pinning play: it pays maximum at the middle strike if ULTA settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ULTA IV rank near 99.54% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on ULTA at 51.36%. As a Consumer Cyclical name, ULTA options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ULTA-specific events.
ULTA 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. ULTA positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ULTA alongside the broader basket even when ULTA-specific fundamentals are unchanged. Always rebuild the position from current ULTA chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ULTA?
- A butterfly on ULTA is the butterfly strategy applied to ULTA (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 ULTA stock trading near $493.77, the strikes shown on this page are snapped to the nearest listed ULTA chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ULTA 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 ULTA butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 51.36%), the computed maximum profit is $2,054.38 per contract and the computed maximum loss is -$320.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ULTA butterfly?
- The breakeven for the ULTA butterfly priced on this page is roughly $473.20 and $516.99 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 ULTA market-implied 1-standard-deviation expected move is approximately 14.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ULTA?
- Butterflies on ULTA are pinning bets - traders use them when they expect ULTA 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 ULTA implied volatility affect this butterfly?
- ULTA ATM IV is at 51.36% with IV rank near 99.54%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.