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Long Butterfly
neutral Capped lossA cheap bet on a precise price target.
When to use it
You expect the stock to pin a specific price at expiry. Buy 1 lower, sell 2 middle, buy 1 upper strike. Very low cost.
Max profit
At the middle strike at expiry.
Max loss
The small net debit paid.
Payoff at expiry
illustrative shape — not to scale
■ profit zone
■ loss zone
X axis = stock price at expiry →
How it's built
Strikes shown low→high. Sell = collect premium · Buy = pay premium for protection or upside.
Hermes-evaluated setups
Best backtested per-ticker setups for this strategy. None currently clear our 80% conviction floor (common for directional / long-volatility structures, which win less often but pay more when they hit) — shown for completeness over ≥20 trades. Win rate is confidence-adjusted (95% lower bound); Avg P/L is per one-contract position.
| Ticker | Win Rate | Avg P/L / contract | Sharpe | Trades | DTE |
|---|---|---|---|---|---|
| CPA | 59% | +$137.00 | 1.9 | 30 | 30 |
| TXN | 52% | +$118.00 | 1.2 | 30 | 30 |
| XRT | 52% | +$103.00 | 1.3 | 30 | 30 |
| MU | 52% | +$100.00 | 1.4 | 30 | 30 |
| KWEB | 56% | +$84.00 | 1.6 | 42 | 21 |
| FXI | 67% | +$70.00 | 1.6 | 42 | 21 |
| BX | 56% | +$68.00 | 1.1 | 30 | 30 |
| CME | 56% | +$64.00 | 1.0 | 30 | 30 |
Backtested results are not a guarantee of future performance.