How are ALRM 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 ALRM butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 26.20%), the computed maximum profit is $221.79 per contract and the computed maximum loss is -$20.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ALRM butterfly?

The breakeven for the ALRM butterfly priced on this page is roughly $52.61 and $57.30 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 ALRM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 7.51%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ALRM implied volatility affect this butterfly?

ALRM ATM IV is at 26.20% with IV rank near 2.46%, 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.

ALRM Butterfly Strategy

ALRM (Alarm.com Holdings, Inc.), in the Technology sector, (Software - Application industry), listed on NASDAQ.

Alarm.com Holdings, Inc. delivers a comprehensive suite of cloud-enabled services tailored for intelligent residential and commercial properties, serving clients across the United States and internationally. The company's operations are divided into two primary divisions: Alarm.com and Other. Its core offerings include interactive security platforms, empowering users to manage and oversee their security systems alongside various connected devices. These integrated security components encompass smart door locks, motion sensors, garage door openers, a range of Internet of Things (IoT) devices, smart thermostats, and advanced video cameras. Furthermore, the company specializes in sophisticated video surveillance capabilities, incorporating features such as video analytics, live streaming, video doorbells, recorded video clips, automated video alerts, continuous high-definition recording, and dedicated commercial video monitoring systems. Beyond security, Alarm.com provides intelligent automation and energy management solutions.

ALRM (Alarm.com Holdings, Inc.) trades in the Technology sector, specifically Software - Application, with a market capitalization of approximately $2.74B, a trailing P/E of 23.20, a beta of 0.76 versus the broader market, a 52-week range of 41.49-59.53, average daily share volume of 505K, 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 0.76 places ALRM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a butterfly on ALRM?

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.

ALRM snapshot

As of August 14, 2026, spot at $55.92, ATM IV 26.20%, IV rank 2.46%, expected move 7.51%. The butterfly on ALRM 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 ALRM specifically: ALRM IV at 26.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a ALRM butterfly, with a market-implied 1-standard-deviation move of approximately 7.51% (roughly $4.20 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 ALRM expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALRM should anchor to the underlying notional of $55.92 per share and to the trader's directional view on ALRM stock.

ALRM butterfly setup

The ALRM 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 ALRM at $55.92 on that close, the first option leg uses a $52.50 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 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 ALRM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$52.50	$4.20
Sell 2	Call	$55.00	$2.48
Buy 1	Call	$57.50	$0.95

ALRM butterfly risk and reward

Net Premium / Debit: -$20.00
Max Profit (per contract): $221.79
Max Loss (per contract): -$20.00
Breakeven(s): $52.61, $57.30
Risk / Reward Ratio: 11.090

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.

ALRM butterfly payoff curve

Modeled P&L at expiration across a range of underlying prices for the butterfly 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$20.00
$12.37	-77.9%	-$20.00
$24.74	-55.8%	-$20.00
$37.10	-33.7%	-$20.00
$49.46	-11.5%	-$20.00
$61.83	+10.6%	-$20.00
$74.19	+32.7%	-$20.00
$86.55	+54.8%	-$20.00
$98.91	+76.9%	-$20.00
$111.28	+99.0%	-$20.00

When traders use butterfly on ALRM

Butterflies on ALRM are pinning bets - traders use them when they expect ALRM 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.

ALRM thesis for this butterfly

The market-implied 1-standard-deviation range for ALRM extends from approximately $51.72 on the downside to $60.12 on the upside. A ALRM long call butterfly is a pinning play: it pays maximum at the middle strike if ALRM settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ALRM IV rank near 2.46% 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 26.20%. 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 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. 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. Always rebuild the position from current ALRM chain quotes before placing a trade.

Frequently asked questions

What is a butterfly on ALRM?: A butterfly on ALRM is the butterfly strategy applied to ALRM (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 ALRM stock at $55.92 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed ALRM chain strike and the premiums come straight from that session's bid/ask midpoint.
How are ALRM 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 ALRM butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 26.20%), the computed maximum profit is $221.79 per contract and the computed maximum loss is -$20.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ALRM butterfly?: The breakeven for the ALRM butterfly priced on this page is roughly $52.61 and $57.30 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 ALRM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 7.51%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a butterfly on ALRM?: Butterflies on ALRM are pinning bets - traders use them when they expect ALRM 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 ALRM implied volatility affect this butterfly?: ALRM ATM IV is at 26.20% with IV rank near 2.46%, 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.