ALRM Bull Call Spread Strategy
ALRM (Alarm.com Holdings, Inc.), in the Technology sector, (Software - Application industry), listed on NASDAQ.
Alarm.com Holdings, Inc. provides cloud-based solutions for smart residential and commercial properties in the United States and internationally. It operates in two segments, Alarm.com and Other. The company provides interactive security solutions to control and monitor their security systems, as well as connected security devices, including door locks, motion sensors, door locks, garage doors, Internet of Things, thermostats, and video cameras; and video monitoring solutions, such as video analytics, live streaming, video doorbell, video clips, video alerts, continuous high definition recording, and commercial video surveillance solutions. It also offers intelligent automation and energy management solutions comprising scenes button; smart thermostat schedules; responsive savings; precision comfort; energy usage monitoring; heating, ventilation, and air conditioning monitoring services; whole home water safety solutions; geo-services; and demand response programs. In addition, the company provides commercial solutions, such as daily safeguards, commercial grade video, energy savings, protection for valuables and inventory, temperature monitoring, multi-site management and access control, early identification, simple to use, professionally supported, and easy to maintain. Further, it offers service provider solutions, including a permission-based online portal that offers account management, sales, marketing, training, and support tools; sales, marketing, and training services; and home builder programs, as well as wellness solutions.
ALRM (Alarm.com Holdings, Inc.) trades in the Technology sector, specifically Software - Application, with a market capitalization of approximately $2.09B, a trailing P/E of 16.38, a beta of 0.79 versus the broader market, a 52-week range of 41.49-60.25, average daily share volume of 482K, a public-listing history dating back to 2015, approximately 2K full-time employees. These structural characteristics shape how ALRM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.79 places ALRM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a bull call spread on ALRM?
A bull call spread buys an at-the-money call and sells an out-of-the-money call at a higher strike for defined risk and defined reward bounded by the strike width.
Current ALRM snapshot
As of May 15, 2026, spot at $42.54, ATM IV 41.30%, IV rank 13.65%, expected move 11.84%. The bull call spread on ALRM 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 217-day expiry.
Why this bull call spread structure on ALRM specifically: ALRM IV at 41.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a ALRM bull call spread, with a market-implied 1-standard-deviation move of approximately 11.84% (roughly $5.04 on the underlying). The 217-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ALRM expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALRM should anchor to the underlying notional of $42.54 per share and to the trader's directional view on ALRM stock.
ALRM bull call spread setup
The ALRM bull call spread below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With ALRM near $42.54, the first option leg uses a $42.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALRM chain at a 217-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 ALRM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $42.50 | $5.40 |
| Sell 1 | Call | $45.00 | $4.53 |
ALRM bull call spread risk and reward
- Net Premium / Debit
- -$87.50
- Max Profit (per contract)
- $162.50
- Max Loss (per contract)
- -$87.50
- Breakeven(s)
- $43.38
- Risk / Reward Ratio
- 1.857
Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-call strike plus net debit.
ALRM bull call spread payoff curve
Modeled P&L at expiration across a range of underlying prices for the bull call spread on ALRM. 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% | -$87.50 |
| $9.41 | -77.9% | -$87.50 |
| $18.82 | -55.8% | -$87.50 |
| $28.22 | -33.7% | -$87.50 |
| $37.63 | -11.5% | -$87.50 |
| $47.03 | +10.6% | +$162.50 |
| $56.44 | +32.7% | +$162.50 |
| $65.84 | +54.8% | +$162.50 |
| $75.25 | +76.9% | +$162.50 |
| $84.65 | +99.0% | +$162.50 |
When traders use bull call spread on ALRM
Bull call spreads on ALRM reduce the cost of a bullish ALRM stock position by selling a higher-strike call; suited to moderate-move theses where price reaches but does not vastly exceed the short strike.
ALRM thesis for this bull call spread
The market-implied 1-standard-deviation range for ALRM extends from approximately $37.50 on the downside to $47.58 on the upside. A ALRM bull call spread caps both the risk and the reward of a bullish position; relative to an outright long call on ALRM, the spread reduces the cost basis but limits the maximum profit to the strike width minus net debit. Current ALRM IV rank near 13.65% 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 ALRM at 41.30%. As a Technology name, ALRM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALRM-specific events.
ALRM bull call spread positions are structurally moderately bullish; 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. ALRM positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALRM alongside the broader basket even when ALRM-specific fundamentals are unchanged. Long-premium structures like a bull call spread on ALRM are particularly exposed to IV-crush risk through scheduled events (earnings, FDA decisions, central-bank meetings) where IV typically contracts post-event regardless of the directional outcome. Always rebuild the position from current ALRM chain quotes before placing a trade.
Frequently asked questions
- What is a bull call spread on ALRM?
- A bull call spread on ALRM is the bull call spread strategy applied to ALRM (stock). The strategy is structurally moderately bullish: A bull call spread buys an at-the-money call and sells an out-of-the-money call at a higher strike for defined risk and defined reward bounded by the strike width. With ALRM stock trading near $42.54, the strikes shown on this page are snapped to the nearest listed ALRM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALRM bull call spread max profit and max loss calculated?
- Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-call strike plus net debit. For the ALRM bull call spread priced from the end-of-day chain at a 30-day expiry (ATM IV 41.30%), the computed maximum profit is $162.50 per contract and the computed maximum loss is -$87.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALRM bull call spread?
- The breakeven for the ALRM bull call spread priced on this page is roughly $43.38 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 ALRM market-implied 1-standard-deviation expected move is approximately 11.84%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a bull call spread on ALRM?
- Bull call spreads on ALRM reduce the cost of a bullish ALRM stock position by selling a higher-strike call; suited to moderate-move theses where price reaches but does not vastly exceed the short strike.
- How does current ALRM implied volatility affect this bull call spread?
- ALRM ATM IV is at 41.30% with IV rank near 13.65%, 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.