ARLO Butterfly Strategy
ARLO (Arlo Technologies, Inc.), in the Industrials sector, (Security & Protection Services industry), listed on NYSE.
Arlo Technologies, Inc., together with its subsidiaries, provides a cloud-based platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions. It combines an intelligent cloud infrastructure and mobile app with various smart connected devices. The company offers Arlo essential indoor camera; Arlo Go 2 LTE/Wi-Fi security camera; Arlo Q and Arlo Q Plus, an indoor wired solution that allows users to monitor their surroundings; and Arlo Go, an LTE-enabled wire-free camera that provides untethered mobile security. It also provides Arlo Baby, a baby monitor with air quality and temperature sensors, motion and audio detection, and advanced night vision; Arlo Chime that pairs with the Arlo Video Doorbell to play a variety of ringtones or act as a siren; Arlo Ultra, an integrated spotlight and crystal-clear two-way audio with advanced noise cancellations camera; Arlo Pro 3, an integrated spotlight with color night vision camera; Arlo Video Doorbell delivers direct-to-mobile video calls and personalized alerts; Arlo Floodlight Camera, a wire-free variant LED camera, as well as Arlo Essential Spotlight; Arlo Ultra 2; Arlo Essential XL Spotlight; Arlo Essential Wire-Free Video Doorbell; and Arlo Pro 4 Wire-Free Spotlight. In addition, it provides Arlo accessories, such as charging accessories, device mounts, and device skins. Further, it offers Arlo app for iOS and Android devices that allow users to connect various devices; and Arlo Secure, with coverage for unlimited cameras and an enhanced emergency response solutions.
ARLO (Arlo Technologies, Inc.) trades in the Industrials sector, specifically Security & Protection Services, with a market capitalization of approximately $1.37B, a trailing P/E of 44.14, a beta of 1.60 versus the broader market, a 52-week range of 11.05-19.94, average daily share volume of 1.7M, a public-listing history dating back to 2018, approximately 360 full-time employees. These structural characteristics shape how ARLO stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.60 indicates ARLO has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 44.14 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple.
What is a butterfly on ARLO?
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 ARLO snapshot
As of May 15, 2026, spot at $12.36, ATM IV 56.80%, IV rank 7.18%, expected move 16.28%. The butterfly on ARLO 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 63-day expiry.
Why this butterfly structure on ARLO specifically: ARLO IV at 56.80% is on the cheap side of its 1-year range, which favors premium-buying structures like a ARLO butterfly, with a market-implied 1-standard-deviation move of approximately 16.28% (roughly $2.01 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ARLO expiries trade a higher absolute premium for lower per-day decay. Position sizing on ARLO should anchor to the underlying notional of $12.36 per share and to the trader's directional view on ARLO stock.
ARLO butterfly setup
The ARLO 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 ARLO near $12.36, the first option leg uses a $12.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ARLO chain at a 63-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 ARLO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $12.00 | $1.38 |
| Sell 2 | Call | $12.00 | $1.38 |
| Buy 1 | Call | $13.00 | $0.83 |
ARLO butterfly risk and reward
- Net Premium / Debit
- +$55.00
- Max Profit (per contract)
- $55.00
- Max Loss (per contract)
- -$45.00
- Breakeven(s)
- $12.55
- Risk / Reward Ratio
- 1.222
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.
ARLO butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ARLO. 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 | -99.9% | +$55.00 |
| $2.74 | -77.8% | +$55.00 |
| $5.47 | -55.7% | +$55.00 |
| $8.21 | -33.6% | +$55.00 |
| $10.94 | -11.5% | +$55.00 |
| $13.67 | +10.6% | -$45.00 |
| $16.40 | +32.7% | -$45.00 |
| $19.13 | +54.8% | -$45.00 |
| $21.86 | +76.9% | -$45.00 |
| $24.60 | +99.0% | -$45.00 |
When traders use butterfly on ARLO
Butterflies on ARLO are pinning bets - traders use them when they expect ARLO 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.
ARLO thesis for this butterfly
The market-implied 1-standard-deviation range for ARLO extends from approximately $10.35 on the downside to $14.37 on the upside. A ARLO long call butterfly is a pinning play: it pays maximum at the middle strike if ARLO settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ARLO IV rank near 7.18% 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 ARLO at 56.80%. As a Industrials name, ARLO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ARLO-specific events.
ARLO 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. ARLO positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ARLO alongside the broader basket even when ARLO-specific fundamentals are unchanged. Always rebuild the position from current ARLO chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ARLO?
- A butterfly on ARLO is the butterfly strategy applied to ARLO (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 ARLO stock trading near $12.36, the strikes shown on this page are snapped to the nearest listed ARLO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ARLO 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 ARLO butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 56.80%), the computed maximum profit is $55.00 per contract and the computed maximum loss is -$45.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ARLO butterfly?
- The breakeven for the ARLO butterfly priced on this page is roughly $12.55 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 ARLO market-implied 1-standard-deviation expected move is approximately 16.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ARLO?
- Butterflies on ARLO are pinning bets - traders use them when they expect ARLO 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 ARLO implied volatility affect this butterfly?
- ARLO ATM IV is at 56.80% with IV rank near 7.18%, 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.