WTS Butterfly Strategy
WTS (Watts Water Technologies, Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Watts Water Technologies, Inc. designs, manufactures, and sells products, solution, and systems that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial and residential markets in the Americas, Europe, the Asia-Pacific, the Middle East, and Africa. The company offers residential and commercial flow control products, including backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves. It also provides heating, ventilation, and air conditioning and gas products, such as boilers, water heaters, custom heat, and hot water solutions; hydronic and electric heating systems for under-floor radiant applications; custom heat and hot water solutions; hydronic pump groups for boiler manufacturers and alternative energy control packages; and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. In addition, the company offers drainage and water re-use products comprising drainage products and engineered rain water harvesting solutions for commercial, industrial, marine, and residential applications; and water quality products that include point-of-use and point-of-entry water filtration, conditioning, and scale prevention systems for commercial and residential applications. Further, it provides smart mixing system under the IntelliStation name. The company sells its products to plumbing, heating, and mechanical wholesale distributors and dealers, as well as original equipment manufacturers, specialty product distributors, do-it-yourself chains, and retail chains; and directly to wholesalers and private label accounts.
WTS (Watts Water Technologies, Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $10.02B, a trailing P/E of 27.43, a beta of 1.19 versus the broader market, a 52-week range of 235.14-345.17, average daily share volume of 234K, a public-listing history dating back to 1986, approximately 5K full-time employees. These structural characteristics shape how WTS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.19 places WTS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. WTS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a butterfly on WTS?
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 WTS snapshot
As of May 15, 2026, spot at $295.94, ATM IV 23.00%, IV rank 2.44%, expected move 6.59%. The butterfly on WTS 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 WTS specifically: WTS IV at 23.00% is on the cheap side of its 1-year range, which favors premium-buying structures like a WTS butterfly, with a market-implied 1-standard-deviation move of approximately 6.59% (roughly $19.51 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 WTS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WTS should anchor to the underlying notional of $295.94 per share and to the trader's directional view on WTS stock.
WTS butterfly setup
The WTS 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 WTS near $295.94, the first option leg uses a $280.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WTS 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 WTS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $280.00 | $19.35 |
| Sell 2 | Call | $300.00 | $6.60 |
| Buy 1 | Call | $310.00 | $3.00 |
WTS butterfly risk and reward
- Net Premium / Debit
- -$915.00
- Max Profit (per contract)
- $1,044.37
- Max Loss (per contract)
- -$915.00
- Breakeven(s)
- $289.15
- Risk / Reward Ratio
- 1.141
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.
WTS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on WTS. 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% | -$915.00 |
| $65.44 | -77.9% | -$915.00 |
| $130.88 | -55.8% | -$915.00 |
| $196.31 | -33.7% | -$915.00 |
| $261.74 | -11.6% | -$915.00 |
| $327.17 | +10.6% | +$85.00 |
| $392.61 | +32.7% | +$85.00 |
| $458.04 | +54.8% | +$85.00 |
| $523.47 | +76.9% | +$85.00 |
| $588.91 | +99.0% | +$85.00 |
When traders use butterfly on WTS
Butterflies on WTS are pinning bets - traders use them when they expect WTS 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.
WTS thesis for this butterfly
The market-implied 1-standard-deviation range for WTS extends from approximately $276.43 on the downside to $315.45 on the upside. A WTS long call butterfly is a pinning play: it pays maximum at the middle strike if WTS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current WTS IV rank near 2.44% 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 WTS at 23.00%. As a Industrials name, WTS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WTS-specific events.
WTS 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. WTS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WTS alongside the broader basket even when WTS-specific fundamentals are unchanged. Always rebuild the position from current WTS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on WTS?
- A butterfly on WTS is the butterfly strategy applied to WTS (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 WTS stock trading near $295.94, the strikes shown on this page are snapped to the nearest listed WTS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WTS 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 WTS butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 23.00%), the computed maximum profit is $1,044.37 per contract and the computed maximum loss is -$915.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WTS butterfly?
- The breakeven for the WTS butterfly priced on this page is roughly $289.15 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 WTS market-implied 1-standard-deviation expected move is approximately 6.59%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on WTS?
- Butterflies on WTS are pinning bets - traders use them when they expect WTS 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 WTS implied volatility affect this butterfly?
- WTS ATM IV is at 23.00% with IV rank near 2.44%, 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.