UPS Butterfly Strategy
UPS (United Parcel Service, Inc.), in the Industrials sector, (Integrated Freight & Logistics industry), listed on NYSE.
United Parcel Service, Inc., a package delivery and logistics provider, offers transportation and delivery services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery services for express letters, documents, packages and palletized freight through air and ground services. The International Package segment provides small package operations in Europe, the Middle East and Africa, Canada and Latin America, and Asia.
UPS (United Parcel Service, Inc.) trades in the Industrials sector, specifically Integrated Freight & Logistics, with a market capitalization of approximately $88.29B, a trailing P/E of 19.33, a beta of 1.04 versus the broader market, a 52-week range of 82-122.41, average daily share volume of 5.5M, a public-listing history dating back to 1999, approximately 460K full-time employees. These structural characteristics shape how UPS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.04 places UPS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. UPS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on UPS?
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.
UPS snapshot
As of August 14, 2026, spot at $104.75, ATM IV 22.13%, IV rank 1.17%, expected move 6.35%. The butterfly on UPS below is built from the August 14, 2026 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 UPS specifically: UPS IV at 22.13% is on the cheap side of its 1-year range, which favors premium-buying structures like a UPS butterfly, with a market-implied 1-standard-deviation move of approximately 6.35% (roughly $6.65 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 UPS expiries trade a higher absolute premium for lower per-day decay. Position sizing on UPS should anchor to the underlying notional of $104.75 per share and to the trader's directional view on UPS stock.
UPS butterfly setup
The UPS butterfly below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With UPS at $104.75 on that close, the first option leg uses a $100.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed UPS 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 UPS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $100.00 | $4.83 |
| Sell 2 | Call | $105.00 | $1.88 |
| Buy 1 | Call | $110.00 | $0.61 |
UPS butterfly risk and reward
- Net Premium / Debit
- -$167.00
- Max Profit (per contract)
- $304.86
- Max Loss (per contract)
- -$167.00
- Breakeven(s)
- $101.67, $108.33
- Risk / Reward Ratio
- 1.826
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.
UPS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on UPS. 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% | -$167.00 |
| $23.17 | -77.9% | -$167.00 |
| $46.33 | -55.8% | -$167.00 |
| $69.49 | -33.7% | -$167.00 |
| $92.65 | -11.6% | -$167.00 |
| $115.81 | +10.6% | -$167.00 |
| $138.97 | +32.7% | -$167.00 |
| $162.13 | +54.8% | -$167.00 |
| $185.29 | +76.9% | -$167.00 |
| $208.45 | +99.0% | -$167.00 |
When traders use butterfly on UPS
Butterflies on UPS are pinning bets - traders use them when they expect UPS 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.
UPS thesis for this butterfly
The market-implied 1-standard-deviation range for UPS extends from approximately $98.10 on the downside to $111.40 on the upside. A UPS long call butterfly is a pinning play: it pays maximum at the middle strike if UPS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current UPS IV rank near 1.17% 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 UPS at 22.13%. As a Industrials name, UPS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to UPS-specific events.
UPS 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. UPS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move UPS alongside the broader basket even when UPS-specific fundamentals are unchanged. Always rebuild the position from current UPS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on UPS?
- A butterfly on UPS is the butterfly strategy applied to UPS (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 UPS stock at $104.75 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed UPS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are UPS 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 UPS butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 22.13%), the computed maximum profit is $304.86 per contract and the computed maximum loss is -$167.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a UPS butterfly?
- The breakeven for the UPS butterfly priced on this page is roughly $101.67 and $108.33 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The UPS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 6.35%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on UPS?
- Butterflies on UPS are pinning bets - traders use them when they expect UPS 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 UPS implied volatility affect this butterfly?
- UPS ATM IV is at 22.13% with IV rank near 1.17%, 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.