How are WES 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 WES butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 18.10%), the computed maximum profit is $172.74 per contract and the computed maximum loss is -$125.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a WES butterfly?

The breakeven for the WES butterfly priced on this page is roughly $44.25 and $47.75 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 WES market-implied 1-standard-deviation expected move is approximately 5.19%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current WES implied volatility affect this butterfly?

WES ATM IV is at 18.10% with IV rank near 31.28%, 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.

WES Butterfly Strategy

WES (Western Midstream Partners, LP), in the Energy sector, (Oil & Gas Midstream industry), listed on NYSE.

Western Midstream Partners, LP, a midstream energy company, together with its subsidiaries, acquires, owns, develops, and operates primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. It also buys and sells natural gas, NGLs, and condensate. The company operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019.

WES (Western Midstream Partners, LP) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $17.87B, a trailing P/E of 15.06, a beta of 0.67 versus the broader market, a 52-week range of 36.9-45.47, average daily share volume of 1.6M, a public-listing history dating back to 2012, approximately 2K full-time employees. These structural characteristics shape how WES stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.67 indicates WES has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. WES pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a butterfly on WES?

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 WES snapshot

As of May 15, 2026, spot at $46.25, ATM IV 18.10%, IV rank 31.28%, expected move 5.19%. The butterfly on WES 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 WES specifically: WES IV at 18.10% 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 5.19% (roughly $2.40 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 WES expiries trade a higher absolute premium for lower per-day decay. Position sizing on WES should anchor to the underlying notional of $46.25 per share and to the trader's directional view on WES stock.

WES butterfly setup

The WES 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 WES near $46.25, the first option leg uses a $44.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WES 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 WES shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$44.00	$2.85
Sell 2	Call	$46.00	$1.43
Buy 1	Call	$49.00	$0.25

WES butterfly risk and reward

Net Premium / Debit: -$25.00
Max Profit (per contract): $172.74
Max Loss (per contract): -$125.00
Breakeven(s): $44.25, $47.75
Risk / Reward Ratio: 1.382

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.

WES butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly on WES. 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%	-$25.00
$10.24	-77.9%	-$25.00
$20.46	-55.8%	-$25.00
$30.69	-33.7%	-$25.00
$40.91	-11.5%	-$25.00
$51.14	+10.6%	-$125.00
$61.36	+32.7%	-$125.00
$71.59	+54.8%	-$125.00
$81.81	+76.9%	-$125.00
$92.04	+99.0%	-$125.00

When traders use butterfly on WES

Butterflies on WES are pinning bets - traders use them when they expect WES 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.

WES thesis for this butterfly

The market-implied 1-standard-deviation range for WES extends from approximately $43.85 on the downside to $48.65 on the upside. A WES long call butterfly is a pinning play: it pays maximum at the middle strike if WES settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WES IV rank near 31.28% is mid-range against its 1-year distribution, so the IV signal is neutral; the butterfly thesis on WES should anchor more to the directional view and the expected-move geometry. As a Energy name, WES options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WES-specific events.

WES 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. WES positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WES alongside the broader basket even when WES-specific fundamentals are unchanged. Always rebuild the position from current WES chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on WES?: A butterfly on WES is the butterfly strategy applied to WES (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 WES stock trading near $46.25, the strikes shown on this page are snapped to the nearest listed WES chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are WES 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 WES butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 18.10%), the computed maximum profit is $172.74 per contract and the computed maximum loss is -$125.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a WES butterfly?: The breakeven for the WES butterfly priced on this page is roughly $44.25 and $47.75 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 WES market-implied 1-standard-deviation expected move is approximately 5.19%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on WES?: Butterflies on WES are pinning bets - traders use them when they expect WES 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 WES implied volatility affect this butterfly?: WES ATM IV is at 18.10% with IV rank near 31.28%, 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.