CARG Straddle Strategy
CARG (CarGurus, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NASDAQ.
CarGurus, Inc., established in Boston, Massachusetts, in 2005, manages a prominent online ecosystem for vehicle transactions, serving both buyers and sellers across the United States and internationally. The company's operations are divided into two main segments: the U.S. Marketplace and Digital Wholesale. Essentially, CarGurus offers an expansive digital automotive marketplace where individuals can search for new and pre-owned vehicle listings from numerous dealerships. Simultaneously, it empowers dealers by linking them with a vast, engaged consumer base and supplying them with practical, data-driven market intelligence. The platform provides an array of specialized features to simplify the car buying and selling journey.
CARG (CarGurus, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $3.56B, a trailing P/E of 18.89, a beta of 1.18 versus the broader market, a 52-week range of 26.39-41.22, average daily share volume of 1.3M, a public-listing history dating back to 2017, approximately 1K full-time employees. These structural characteristics shape how CARG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.18 places CARG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a straddle on CARG?
A long straddle buys an ATM call and an ATM put at the same strike, profiting from a large move in either direction; max loss equals the combined debit when the underlying pins to the strike at expiration.
CARG snapshot
As of August 14, 2026, spot at $37.16, ATM IV 42.40%, IV rank 20.55%, expected move 12.16%. The straddle on CARG 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 straddle structure on CARG specifically: CARG IV at 42.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a CARG straddle, with a market-implied 1-standard-deviation move of approximately 12.16% (roughly $4.52 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 CARG expiries trade a higher absolute premium for lower per-day decay. Position sizing on CARG should anchor to the underlying notional of $37.16 per share and to the trader's directional view on CARG stock.
CARG straddle setup
The CARG straddle 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 CARG at $37.16 on that close, the first option leg uses a $37.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CARG 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 CARG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $37.00 | $2.53 |
| Buy 1 | Put | $37.00 | $1.73 |
CARG straddle risk and reward
- Net Premium / Debit
- -$425.00
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$422.83
- Breakeven(s)
- $32.75, $41.25
- Risk / Reward Ratio
- Unbounded
Upside max profit is unbounded; downside max profit is bounded at the strike minus the combined call plus put debit (reached at zero). Max loss equals the combined debit times 100 (reached when the underlying pins to the strike). Two breakevens at strike plus debit and strike minus debit.
CARG straddle payoff curve
Modeled P&L at expiration across a range of underlying prices for the straddle on CARG. 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% | +$3,274.00 |
| $8.23 | -77.9% | +$2,452.48 |
| $16.44 | -55.8% | +$1,630.96 |
| $24.66 | -33.7% | +$809.45 |
| $32.87 | -11.5% | -$12.07 |
| $41.09 | +10.6% | -$16.41 |
| $49.30 | +32.7% | +$805.11 |
| $57.52 | +54.8% | +$1,626.62 |
| $65.73 | +76.9% | +$2,448.14 |
| $73.95 | +99.0% | +$3,269.66 |
When traders use straddle on CARG
Straddles on CARG are pure-volatility plays that profit from large moves in either direction; traders typically buy CARG straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
CARG thesis for this straddle
The market-implied 1-standard-deviation range for CARG extends from approximately $32.64 on the downside to $41.68 on the upside. A CARG long straddle is a pure-volatility play: it profits when the underlying moves far enough from the strike in either direction to overcome the combined call plus put debit, regardless of direction. Current CARG IV rank near 20.55% 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 CARG at 42.40%. As a Consumer Cyclical name, CARG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CARG-specific events.
CARG straddle positions are structurally neutral / high-volatility (long premium); 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. CARG positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CARG alongside the broader basket even when CARG-specific fundamentals are unchanged. Always rebuild the position from current CARG chain quotes before placing a trade.
Frequently asked questions
- What is a straddle on CARG?
- A straddle on CARG is the straddle strategy applied to CARG (stock). The strategy is structurally neutral / high-volatility (long premium): A long straddle buys an ATM call and an ATM put at the same strike, profiting from a large move in either direction; max loss equals the combined debit when the underlying pins to the strike at expiration. With CARG stock at $37.16 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed CARG chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are CARG straddle max profit and max loss calculated?
- Upside max profit is unbounded; downside max profit is bounded at the strike minus the combined call plus put debit (reached at zero). Max loss equals the combined debit times 100 (reached when the underlying pins to the strike). Two breakevens at strike plus debit and strike minus debit. For the CARG straddle priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 42.40%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$422.83 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CARG straddle?
- The breakeven for the CARG straddle priced on this page is roughly $32.75 and $41.25 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 CARG market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.16%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a straddle on CARG?
- Straddles on CARG are pure-volatility plays that profit from large moves in either direction; traders typically buy CARG straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
- How does current CARG implied volatility affect this straddle?
- CARG ATM IV is at 42.40% with IV rank near 20.55%, 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.