CMI Iron Condor Strategy
CMI (Cummins Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines. It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies.
CMI (Cummins Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $97.91B, a trailing P/E of 36.71, a beta of 1.27 versus the broader market, a 52-week range of 307.9-718.08, average daily share volume of 861K, a public-listing history dating back to 1947, approximately 70K 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 1.27 places CMI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 36.71 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. CMI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a iron condor on CMI?
An iron condor sells a call spread and a put spread at strikes outside spot, collecting net premium that is kept if the underlying stays inside the inner short strikes.
Current CMI snapshot
As of May 15, 2026, spot at $696.29, ATM IV 38.10%, IV rank 53.10%, expected move 10.92%. The iron condor on CMI 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 34-day expiry.
Why this iron condor structure on CMI specifically: CMI IV at 38.10% is mid-range versus its 1-year history, so the credit collected on a CMI iron condor sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 10.92% (roughly $76.06 on the underlying). The 34-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 $696.29 per share and to the trader's directional view on CMI stock.
CMI iron condor setup
The CMI iron condor below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With CMI near $696.29, the first option leg uses a $730.00 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 34-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) |
|---|---|---|---|
| Sell 1 | Call | $730.00 | $17.90 |
| Buy 1 | Call | $770.00 | $7.70 |
| Sell 1 | Put | $660.00 | $16.95 |
| Buy 1 | Put | $630.00 | $9.30 |
CMI iron condor risk and reward
- Net Premium / Debit
- +$1,785.00
- Max Profit (per contract)
- $1,785.00
- Max Loss (per contract)
- -$2,215.00
- Breakeven(s)
- $642.15, $747.85
- Risk / Reward Ratio
- 0.806
Max profit equals the net credit times 100 inside the inner strikes; max loss equals wing width minus credit times 100. Two breakevens at inner strikes plus and minus the credit.
CMI iron condor payoff curve
Modeled P&L at expiration across a range of underlying prices for the iron condor 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% | -$1,215.00 |
| $153.96 | -77.9% | -$1,215.00 |
| $307.91 | -55.8% | -$1,215.00 |
| $461.87 | -33.7% | -$1,215.00 |
| $615.82 | -11.6% | -$1,215.00 |
| $769.77 | +10.6% | -$2,192.23 |
| $923.72 | +32.7% | -$2,215.00 |
| $1,077.68 | +54.8% | -$2,215.00 |
| $1,231.63 | +76.9% | -$2,215.00 |
| $1,385.58 | +99.0% | -$2,215.00 |
When traders use iron condor on CMI
Iron condors on CMI are a delta-neutral premium-collection structure that profits if CMI stock stays inside the inner short strikes; short strikes typically sit near 1 standard deviation from spot.
CMI thesis for this iron condor
The market-implied 1-standard-deviation range for CMI extends from approximately $620.23 on the downside to $772.35 on the upside. A CMI iron condor is a delta-neutral premium-collection structure that pays off when CMI stays inside the inner short strikes through expiration; the wing width should reflect the trader's tolerance for the maximum loss scenario where the underlying breaches an outer strike. Current CMI IV rank near 53.10% is mid-range against its 1-year distribution, so the IV signal is neutral; the iron condor 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 iron condor positions are structurally neutral / range-bound; 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. Short-premium structures like a iron condor on CMI carry tail risk when realized volatility exceeds the implied move; review historical CMI earnings reactions and macro stress periods before sizing. Always rebuild the position from current CMI chain quotes before placing a trade.
Frequently asked questions
- What is a iron condor on CMI?
- A iron condor on CMI is the iron condor strategy applied to CMI (stock). The strategy is structurally neutral / range-bound: An iron condor sells a call spread and a put spread at strikes outside spot, collecting net premium that is kept if the underlying stays inside the inner short strikes. With CMI stock trading near $696.29, the strikes shown on this page are snapped to the nearest listed CMI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CMI iron condor max profit and max loss calculated?
- Max profit equals the net credit times 100 inside the inner strikes; max loss equals wing width minus credit times 100. Two breakevens at inner strikes plus and minus the credit. For the CMI iron condor priced from the end-of-day chain at a 30-day expiry (ATM IV 38.10%), the computed maximum profit is $1,785.00 per contract and the computed maximum loss is -$2,215.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CMI iron condor?
- The breakeven for the CMI iron condor priced on this page is roughly $642.15 and $747.85 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 CMI market-implied 1-standard-deviation expected move is approximately 10.92%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a iron condor on CMI?
- Iron condors on CMI are a delta-neutral premium-collection structure that profits if CMI stock stays inside the inner short strikes; short strikes typically sit near 1 standard deviation from spot.
- How does current CMI implied volatility affect this iron condor?
- CMI ATM IV is at 38.10% with IV rank near 53.10%, 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.