TXS Strangle Strategy
TXS (Texas Capital Texas Equity Index ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
TXS tracks an index composed of companies that have significant contributions to the economy of Texas. The fund adviser believes that companies headquartered in Texas enjoy certain economic, regulatory, taxation, workforce and other benefits relative to companies headquartered in other states. Initially, all eligible securities from the investable equity universe that meet certain size and liquidity requirements are selected as index constituents. Component sectors in the index are weighted based on their industry contributions to Texass GDP, as reported for the private sector by the US Bureau of Economic Analysis. Companies within each sector are then weighted based on their market-cap, with a minimum cap of 0.05% and maximum cap of 10% per constituent. The fund does not limit its investment to a certain market-cap bracket.
TXS (Texas Capital Texas Equity Index ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $34.1M, a beta of 0.91 versus the broader market, a 52-week range of 32.89-39.78, average daily share volume of 3K, a public-listing history dating back to 2023. These structural characteristics shape how TXS etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.91 places TXS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. TXS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a strangle on TXS?
A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money.
Current TXS snapshot
As of May 15, 2026, spot at $39.41, ATM IV 54.80%, expected move 15.71%. The strangle on TXS 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 strangle structure on TXS specifically: IV rank is unavailable in the current snapshot, so regime-based timing for TXS is inferred from ATM IV at 54.80% alone, with a market-implied 1-standard-deviation move of approximately 15.71% (roughly $6.19 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 TXS expiries trade a higher absolute premium for lower per-day decay. Position sizing on TXS should anchor to the underlying notional of $39.41 per share and to the trader's directional view on TXS etf.
TXS strangle setup
The TXS strangle below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With TXS near $39.41, the first option leg uses a $41.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TXS 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 TXS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $41.00 | $2.02 |
| Buy 1 | Put | $37.00 | $1.51 |
TXS strangle risk and reward
- Net Premium / Debit
- -$353.00
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$353.00
- Breakeven(s)
- $33.47, $44.53
- Risk / Reward Ratio
- Unbounded
Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit.
TXS strangle payoff curve
Modeled P&L at expiration across a range of underlying prices for the strangle on TXS. 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% | +$3,346.00 |
| $8.72 | -77.9% | +$2,474.73 |
| $17.44 | -55.8% | +$1,603.47 |
| $26.15 | -33.7% | +$732.20 |
| $34.86 | -11.5% | -$139.07 |
| $43.57 | +10.6% | -$95.67 |
| $52.29 | +32.7% | +$775.60 |
| $61.00 | +54.8% | +$1,646.86 |
| $69.71 | +76.9% | +$2,518.13 |
| $78.42 | +99.0% | +$3,389.40 |
When traders use strangle on TXS
Strangles on TXS are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the TXS chain.
TXS thesis for this strangle
The market-implied 1-standard-deviation range for TXS extends from approximately $33.22 on the downside to $45.60 on the upside. A TXS long strangle is the OTM cousin of the straddle: lower up-front cost but the underlying has to travel further past either OTM strike before the position turns profitable at expiration. As a Financial Services name, TXS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TXS-specific events.
TXS strangle positions are structurally neutral / high-volatility (long premium, OTM); 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. TXS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TXS alongside the broader basket even when TXS-specific fundamentals are unchanged. Always rebuild the position from current TXS chain quotes before placing a trade.
Frequently asked questions
- What is a strangle on TXS?
- A strangle on TXS is the strangle strategy applied to TXS (etf). The strategy is structurally neutral / high-volatility (long premium, OTM): A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money. With TXS etf trading near $39.41, the strikes shown on this page are snapped to the nearest listed TXS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TXS strangle max profit and max loss calculated?
- Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit. For the TXS strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 54.80%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$353.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TXS strangle?
- The breakeven for the TXS strangle priced on this page is roughly $33.47 and $44.53 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 TXS market-implied 1-standard-deviation expected move is approximately 15.71%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a strangle on TXS?
- Strangles on TXS are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the TXS chain.
- How does current TXS implied volatility affect this strangle?
- Current TXS ATM IV is 54.80%; IV rank context is unavailable in the current snapshot.