UNH Butterfly Strategy
UNH (UnitedHealth Group Incorporated), in the Healthcare sector, (Medical - Healthcare Plans industry), listed on NYSE.
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. It operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx. The UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; health care coverage and well-being services to individuals age 50 and older addressing their needs for preventive and acute health care services, as well as services dealing with chronic disease and other specialized issues for older individuals; Medicaid plans, children's health insurance and health care programs; health and dental benefits; and hospital and clinical services. The OptumHealth segment provides access to networks of care provider specialists, health management services, care delivery, consumer engagement, and financial services. This segment serves individuals directly through care delivery systems, employers, payers, and government entities. The OptumInsight segment offers software and information products, advisory consulting arrangements, and managed services outsourcing contracts to hospital systems, physicians, health plans, governments, life sciences companies, and other organizations.
UNH (UnitedHealth Group Incorporated) trades in the Healthcare sector, specifically Medical - Healthcare Plans, with a market capitalization of approximately $364.31B, a trailing P/E of 30.31, a beta of 0.65 versus the broader market, a 52-week range of 234.6-404.15, average daily share volume of 8.5M, a public-listing history dating back to 1984, approximately 400K full-time employees. These structural characteristics shape how UNH stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.65 indicates UNH has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. UNH pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on UNH?
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 UNH snapshot
As of May 15, 2026, spot at $391.49, ATM IV 27.65%, IV rank 5.18%, expected move 7.93%. The butterfly on UNH 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 UNH specifically: UNH IV at 27.65% is on the cheap side of its 1-year range, which favors premium-buying structures like a UNH butterfly, with a market-implied 1-standard-deviation move of approximately 7.93% (roughly $31.04 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 UNH expiries trade a higher absolute premium for lower per-day decay. Position sizing on UNH should anchor to the underlying notional of $391.49 per share and to the trader's directional view on UNH stock.
UNH butterfly setup
The UNH 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 UNH near $391.49, the first option leg uses a $370.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed UNH 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 UNH shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $370.00 | $27.43 |
| Sell 2 | Call | $390.00 | $13.23 |
| Buy 1 | Call | $410.00 | $5.98 |
UNH butterfly risk and reward
- Net Premium / Debit
- -$695.00
- Max Profit (per contract)
- $1,257.77
- Max Loss (per contract)
- -$695.00
- Breakeven(s)
- $376.95, $403.05
- Risk / Reward Ratio
- 1.810
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.
UNH butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on UNH. 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% | -$695.00 |
| $86.57 | -77.9% | -$695.00 |
| $173.13 | -55.8% | -$695.00 |
| $259.69 | -33.7% | -$695.00 |
| $346.25 | -11.6% | -$695.00 |
| $432.81 | +10.6% | -$695.00 |
| $519.37 | +32.7% | -$695.00 |
| $605.93 | +54.8% | -$695.00 |
| $692.49 | +76.9% | -$695.00 |
| $779.05 | +99.0% | -$695.00 |
When traders use butterfly on UNH
Butterflies on UNH are pinning bets - traders use them when they expect UNH 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.
UNH thesis for this butterfly
The market-implied 1-standard-deviation range for UNH extends from approximately $360.45 on the downside to $422.53 on the upside. A UNH long call butterfly is a pinning play: it pays maximum at the middle strike if UNH settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current UNH IV rank near 5.18% 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 UNH at 27.65%. As a Healthcare name, UNH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to UNH-specific events.
UNH 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. UNH positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move UNH alongside the broader basket even when UNH-specific fundamentals are unchanged. Always rebuild the position from current UNH chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on UNH?
- A butterfly on UNH is the butterfly strategy applied to UNH (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 UNH stock trading near $391.49, the strikes shown on this page are snapped to the nearest listed UNH chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are UNH 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 UNH butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 27.65%), the computed maximum profit is $1,257.77 per contract and the computed maximum loss is -$695.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a UNH butterfly?
- The breakeven for the UNH butterfly priced on this page is roughly $376.95 and $403.05 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 UNH market-implied 1-standard-deviation expected move is approximately 7.93%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on UNH?
- Butterflies on UNH are pinning bets - traders use them when they expect UNH 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 UNH implied volatility affect this butterfly?
- UNH ATM IV is at 27.65% with IV rank near 5.18%, 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.