WMS Butterfly Strategy
WMS (Advanced Drainage Systems, Inc.), in the Industrials sector, (Construction industry), listed on NYSE.
Advanced Drainage Systems, Inc., established in Hilliard, Ohio in 1966, is a leading provider of innovative water management solutions. The company specializes in the design, manufacturing, and global distribution of thermoplastic corrugated pipes and related drainage products, primarily targeting the underground construction and infrastructure sectors across the United States, Canada, Mexico, and other international territories. Its operations are structured across four key segments: Pipe, International, Infiltrator, and Allied Products & Other. ADS offers a wide array of products, including single, double, and triple-wall corrugated pipes made from polypropylene and polyethylene. Beyond basic piping, their extensive catalog features sophisticated water management systems such as plastic leachfield chambers, EZflow synthetic aggregate bundles, advanced mechanical aeration wastewater solutions, septic tanks and accessories, and integrated treatment and dispersal units. Furthermore, the company supplies allied products like storm retention, detention, and septic chambers, polyvinyl chloride drainage structures, various fittings, and water quality filters and separators.
WMS (Advanced Drainage Systems, Inc.) trades in the Industrials sector, specifically Construction, with a market capitalization of approximately $10.77B, a trailing P/E of 23.84, a beta of 1.29 versus the broader market, a 52-week range of 128.03-179.315, average daily share volume of 887K, a public-listing history dating back to 2014, approximately 6K full-time employees. These structural characteristics shape how WMS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.29 places WMS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. WMS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on WMS?
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.
WMS snapshot
As of August 14, 2026, spot at $149.89, ATM IV 34.80%, IV rank 20.07%, expected move 9.98%. The butterfly on WMS 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 35-day expiry.
Why this butterfly structure on WMS specifically: WMS IV at 34.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a WMS butterfly, with a market-implied 1-standard-deviation move of approximately 9.98% (roughly $14.95 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated WMS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WMS should anchor to the underlying notional of $149.89 per share and to the trader's directional view on WMS stock.
WMS butterfly setup
The WMS 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 WMS at $149.89 on that close, the first option leg uses a $140.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WMS chain at a 35-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 WMS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $140.00 | $12.80 |
| Sell 2 | Call | $150.00 | $6.25 |
| Buy 1 | Call | $155.00 | $4.45 |
WMS butterfly risk and reward
- Net Premium / Debit
- -$475.00
- Max Profit (per contract)
- $460.18
- Max Loss (per contract)
- -$475.00
- Breakeven(s)
- $144.75
- Risk / Reward Ratio
- 0.969
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.
WMS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WMS. 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% | -$475.00 |
| $33.15 | -77.9% | -$475.00 |
| $66.29 | -55.8% | -$475.00 |
| $99.43 | -33.7% | -$475.00 |
| $132.57 | -11.6% | -$475.00 |
| $165.71 | +10.6% | +$25.00 |
| $198.85 | +32.7% | +$25.00 |
| $231.99 | +54.8% | +$25.00 |
| $265.13 | +76.9% | +$25.00 |
| $298.27 | +99.0% | +$25.00 |
When traders use butterfly on WMS
Butterflies on WMS are pinning bets - traders use them when they expect WMS 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.
WMS thesis for this butterfly
The market-implied 1-standard-deviation range for WMS extends from approximately $134.94 on the downside to $164.84 on the upside. A WMS long call butterfly is a pinning play: it pays maximum at the middle strike if WMS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WMS IV rank near 20.07% 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 WMS at 34.80%. As a Industrials name, WMS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WMS-specific events.
WMS 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. WMS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WMS alongside the broader basket even when WMS-specific fundamentals are unchanged. Always rebuild the position from current WMS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WMS?
- A butterfly on WMS is the butterfly strategy applied to WMS (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 WMS stock at $149.89 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed WMS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are WMS 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 WMS butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 34.80%), the computed maximum profit is $460.18 per contract and the computed maximum loss is -$475.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WMS butterfly?
- The breakeven for the WMS butterfly priced on this page is roughly $144.75 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 WMS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 9.98%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WMS?
- Butterflies on WMS are pinning bets - traders use them when they expect WMS 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 WMS implied volatility affect this butterfly?
- WMS ATM IV is at 34.80% with IV rank near 20.07%, 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.