WBS Butterfly Strategy
WBS (Webster Financial Corporation), in the Financial Services sector, (Banks - Regional industry), listed on NYSE.
Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Retail Banking. The Commercial Banking segment provides lending, deposit, and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators, and consumers; and trust, asset management, financial planning, insurance, retirement, and investment products. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants, and financial advisors. The Retail Banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers. The company also offers online and mobile banking services.
WBS (Webster Financial Corporation) trades in the Financial Services sector, specifically Banks - Regional, with a market capitalization of approximately $11.61B, a trailing P/E of 11.19, a beta of 1.01 versus the broader market, a 52-week range of 49.81-74, average daily share volume of 4.0M, a public-listing history dating back to 1986, approximately 4K full-time employees. These structural characteristics shape how WBS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.01 places WBS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 11.19 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. WBS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on WBS?
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 WBS snapshot
As of May 15, 2026, spot at $71.48, ATM IV 5.50%, IV rank 0.00%, expected move 1.58%. The butterfly on WBS 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 63-day expiry.
Why this butterfly structure on WBS specifically: WBS IV at 5.50% is on the cheap side of its 1-year range, which favors premium-buying structures like a WBS butterfly, with a market-implied 1-standard-deviation move of approximately 1.58% (roughly $1.13 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated WBS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WBS should anchor to the underlying notional of $71.48 per share and to the trader's directional view on WBS stock.
WBS butterfly setup
The WBS 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 WBS near $71.48, the first option leg uses a $67.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WBS chain at a 63-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 WBS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $67.50 | $4.25 |
| Sell 2 | Call | $72.50 | $1.65 |
| Buy 1 | Call | $75.00 | $0.74 |
WBS butterfly risk and reward
- Net Premium / Debit
- -$169.00
- Max Profit (per contract)
- $324.75
- Max Loss (per contract)
- -$169.00
- Breakeven(s)
- $69.19
- Risk / Reward Ratio
- 1.922
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.
WBS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WBS. 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% | -$169.00 |
| $15.81 | -77.9% | -$169.00 |
| $31.62 | -55.8% | -$169.00 |
| $47.42 | -33.7% | -$169.00 |
| $63.22 | -11.5% | -$169.00 |
| $79.03 | +10.6% | +$81.00 |
| $94.83 | +32.7% | +$81.00 |
| $110.63 | +54.8% | +$81.00 |
| $126.44 | +76.9% | +$81.00 |
| $142.24 | +99.0% | +$81.00 |
When traders use butterfly on WBS
Butterflies on WBS are pinning bets - traders use them when they expect WBS 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.
WBS thesis for this butterfly
The market-implied 1-standard-deviation range for WBS extends from approximately $70.35 on the downside to $72.61 on the upside. A WBS long call butterfly is a pinning play: it pays maximum at the middle strike if WBS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WBS IV rank near 0.00% 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 WBS at 5.50%. As a Financial Services name, WBS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WBS-specific events.
WBS 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. WBS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WBS alongside the broader basket even when WBS-specific fundamentals are unchanged. Always rebuild the position from current WBS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WBS?
- A butterfly on WBS is the butterfly strategy applied to WBS (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 WBS stock trading near $71.48, the strikes shown on this page are snapped to the nearest listed WBS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WBS 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 WBS butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 5.50%), the computed maximum profit is $324.75 per contract and the computed maximum loss is -$169.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WBS butterfly?
- The breakeven for the WBS butterfly priced on this page is roughly $69.19 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 WBS market-implied 1-standard-deviation expected move is approximately 1.58%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WBS?
- Butterflies on WBS are pinning bets - traders use them when they expect WBS 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 WBS implied volatility affect this butterfly?
- WBS ATM IV is at 5.50% with IV rank near 0.00%, 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.