CMI Long Call 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 long call on CMI?
A long call buys upside exposure with a fixed maximum loss equal to the premium paid; profit accrues if the underlying closes above the strike plus premium at expiration.
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 long call 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 long call structure on CMI specifically: CMI IV at 38.10% 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 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 long call setup
The CMI long call 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 $700.00 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) |
|---|---|---|---|
| Buy 1 | Call | $700.00 | $30.65 |
CMI long call risk and reward
- Net Premium / Debit
- -$3,065.00
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$3,065.00
- Breakeven(s)
- $730.65
- Risk / Reward Ratio
- Unbounded
Max profit is unbounded; max loss equals the premium paid times 100. Breakeven is strike plus premium.
CMI long call payoff curve
Modeled P&L at expiration across a range of underlying prices for the long call 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% | -$3,065.00 |
| $153.96 | -77.9% | -$3,065.00 |
| $307.91 | -55.8% | -$3,065.00 |
| $461.87 | -33.7% | -$3,065.00 |
| $615.82 | -11.6% | -$3,065.00 |
| $769.77 | +10.6% | +$3,912.23 |
| $923.72 | +32.7% | +$19,307.48 |
| $1,077.68 | +54.8% | +$34,702.72 |
| $1,231.63 | +76.9% | +$50,097.97 |
| $1,385.58 | +99.0% | +$65,493.22 |
When traders use long call on CMI
Long calls on CMI express a bullish thesis with defined risk; traders use them ahead of CMI catalysts (earnings, product launches, macro events) when the expected upside justifies the premium and theta decay.
CMI thesis for this long call
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 long call expresses a directional view that the underlying closes above the strike plus premium at expiration, ideally with implied volatility holding or expanding to preserve extrinsic value through the hold period. Current CMI IV rank near 53.10% is mid-range against its 1-year distribution, so the IV signal is neutral; the long call 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 long call positions are structurally bullish; 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 long call 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 long call on CMI?
- A long call on CMI is the long call strategy applied to CMI (stock). The strategy is structurally bullish: A long call buys upside exposure with a fixed maximum loss equal to the premium paid; profit accrues if the underlying closes above the strike plus premium at expiration. 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 long call max profit and max loss calculated?
- Max profit is unbounded; max loss equals the premium paid times 100. Breakeven is strike plus premium. For the CMI long call priced from the end-of-day chain at a 30-day expiry (ATM IV 38.10%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$3,065.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CMI long call?
- The breakeven for the CMI long call priced on this page is roughly $730.65 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 long call on CMI?
- Long calls on CMI express a bullish thesis with defined risk; traders use them ahead of CMI catalysts (earnings, product launches, macro events) when the expected upside justifies the premium and theta decay.
- How does current CMI implied volatility affect this long call?
- 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.