CMI Bear Put Spread Strategy
CMI (Cummins Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Cummins Inc. is a global innovator in power solutions, responsible for the design, manufacturing, distribution, and maintenance of a broad array of diesel and natural gas engines, alongside cutting-edge electric and hybrid powertrains, and associated components. Its operations are strategically divided into five segments: Engine, Distribution, Components, Power Systems, and New Power. The company's extensive engine portfolio, available under the Cummins brand and others, powers a vast range of heavy and medium-duty applications, including commercial trucks, buses, recreational vehicles, light-duty automobiles, construction and mining equipment, marine vessels, railway systems, oil and gas operations, defense, and agriculture. Complementing these engines, Cummins provides both new and remanufactured parts and comprehensive servicing. Beyond its core engine offerings, Cummins delivers sophisticated power generation systems, high-horsepower engines, and specialized application engineering. It also offers custom-designed assemblies, retail and wholesale aftermarket components, and expert repair services conducted both in-shop and on-site.
CMI (Cummins Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $88.02B, a trailing P/E of 32.44, a beta of 1.25 versus the broader market, a 52-week range of 389.52-737.76, average daily share volume of 982K, a public-listing history dating back to 1947, approximately 67K full-time employees. These structural characteristics shape how CMI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.25 places CMI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. CMI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a bear put spread on CMI?
A bear put spread buys an at-the-money put and sells an out-of-the-money put at a lower strike for defined risk and defined reward bounded by the strike width.
CMI snapshot
As of August 14, 2026, spot at $631.75, ATM IV 32.70%, IV rank 35.19%, expected move 9.37%. The bear put spread on CMI 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 bear put spread structure on CMI specifically: CMI IV at 32.70% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 9.37% (roughly $59.23 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 CMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on CMI should anchor to the underlying notional of $631.75 per share and to the trader's directional view on CMI stock.
CMI bear put spread setup
The CMI bear put spread 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 CMI at $631.75 on that close, the first option leg uses a $630.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CMI 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 CMI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Put | $630.00 | $24.15 |
| Sell 1 | Put | $600.00 | $11.90 |
CMI bear put spread risk and reward
- Net Premium / Debit
- -$1,225.00
- Max Profit (per contract)
- $1,775.00
- Max Loss (per contract)
- -$1,225.00
- Breakeven(s)
- $617.75
- Risk / Reward Ratio
- 1.449
Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-put strike minus net debit.
CMI bear put spread payoff curve
Modeled P&L at expiration across a range of underlying prices for the bear put spread on CMI. 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% | +$1,775.00 |
| $139.69 | -77.9% | +$1,775.00 |
| $279.37 | -55.8% | +$1,775.00 |
| $419.06 | -33.7% | +$1,775.00 |
| $558.74 | -11.6% | +$1,775.00 |
| $698.42 | +10.6% | -$1,225.00 |
| $838.10 | +32.7% | -$1,225.00 |
| $977.79 | +54.8% | -$1,225.00 |
| $1,117.47 | +76.9% | -$1,225.00 |
| $1,257.15 | +99.0% | -$1,225.00 |
When traders use bear put spread on CMI
Bear put spreads on CMI reduce the cost of a bearish CMI stock position by selling a lower-strike put; suited to moderate-decline theses where price reaches but does not vastly exceed the short strike.
CMI thesis for this bear put spread
The market-implied 1-standard-deviation range for CMI extends from approximately $572.52 on the downside to $690.98 on the upside. A CMI bear put spread caps both the risk and the reward of a bearish position; relative to an outright long put on CMI, the spread reduces the cost basis but limits the maximum profit to the strike width minus net debit. Current CMI IV rank near 35.19% is mid-range against its 1-year distribution, so the IV signal is neutral; the bear put spread thesis on CMI should anchor more to the directional view and the expected-move geometry. As a Industrials name, CMI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CMI-specific events.
CMI bear put spread positions are structurally moderately bearish; 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. CMI positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CMI alongside the broader basket even when CMI-specific fundamentals are unchanged. Long-premium structures like a bear put spread on CMI 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 CMI chain quotes before placing a trade.
Frequently asked questions
- What is a bear put spread on CMI?
- A bear put spread on CMI is the bear put spread strategy applied to CMI (stock). The strategy is structurally moderately bearish: A bear put spread buys an at-the-money put and sells an out-of-the-money put at a lower strike for defined risk and defined reward bounded by the strike width. With CMI stock at $631.75 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed CMI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are CMI bear put 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-put strike minus net debit. For the CMI bear put spread priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 32.70%), the computed maximum profit is $1,775.00 per contract and the computed maximum loss is -$1,225.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CMI bear put spread?
- The breakeven for the CMI bear put spread priced on this page is roughly $617.75 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 CMI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 9.37%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a bear put spread on CMI?
- Bear put spreads on CMI reduce the cost of a bearish CMI stock position by selling a lower-strike put; suited to moderate-decline theses where price reaches but does not vastly exceed the short strike.
- How does current CMI implied volatility affect this bear put spread?
- CMI ATM IV is at 32.70% with IV rank near 35.19%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.