DHI Straddle Strategy
DHI (D.R. Horton, Inc.), in the Consumer Cyclical sector, (Residential Construction industry), listed on NYSE.
D.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 31 states and 98 markets under the names of D.R. Horton, America's Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as town homes, duplexes, and triplexes. It also provides mortgage financing services; and title insurance policies, and examination and closing services, as well as engages in the residential lot development business.
DHI (D.R. Horton, Inc.) trades in the Consumer Cyclical sector, specifically Residential Construction, with a market capitalization of approximately $39.91B, a trailing P/E of 12.77, a beta of 1.41 versus the broader market, a 52-week range of 114.17-184.55, average daily share volume of 2.6M, a public-listing history dating back to 1992, approximately 15K full-time employees. These structural characteristics shape how DHI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.41 indicates DHI has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. DHI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a straddle on DHI?
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.
Current DHI snapshot
As of May 15, 2026, spot at $135.49, ATM IV 36.40%, IV rank 29.56%, expected move 10.44%. The straddle on DHI 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 28-day expiry.
Why this straddle structure on DHI specifically: DHI IV at 36.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a DHI straddle, with a market-implied 1-standard-deviation move of approximately 10.44% (roughly $14.14 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated DHI expiries trade a higher absolute premium for lower per-day decay. Position sizing on DHI should anchor to the underlying notional of $135.49 per share and to the trader's directional view on DHI stock.
DHI straddle setup
The DHI straddle below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With DHI near $135.49, the first option leg uses a $135.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DHI chain at a 28-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 DHI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $135.00 | $5.85 |
| Buy 1 | Put | $135.00 | $5.15 |
DHI straddle risk and reward
- Net Premium / Debit
- -$1,100.00
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$1,081.42
- Breakeven(s)
- $124.00, $146.00
- 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.
DHI straddle payoff curve
Modeled P&L at expiration across a range of underlying prices for the straddle on DHI. 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% | +$12,399.00 |
| $29.97 | -77.9% | +$9,403.35 |
| $59.92 | -55.8% | +$6,407.70 |
| $89.88 | -33.7% | +$3,412.06 |
| $119.84 | -11.6% | +$416.41 |
| $149.79 | +10.6% | +$379.24 |
| $179.75 | +32.7% | +$3,374.89 |
| $209.71 | +54.8% | +$6,370.54 |
| $239.66 | +76.9% | +$9,366.19 |
| $269.62 | +99.0% | +$12,361.83 |
When traders use straddle on DHI
Straddles on DHI are pure-volatility plays that profit from large moves in either direction; traders typically buy DHI straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
DHI thesis for this straddle
The market-implied 1-standard-deviation range for DHI extends from approximately $121.35 on the downside to $149.63 on the upside. A DHI 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 DHI IV rank near 29.56% 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 DHI at 36.40%. As a Consumer Cyclical name, DHI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DHI-specific events.
DHI 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. DHI positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DHI alongside the broader basket even when DHI-specific fundamentals are unchanged. Always rebuild the position from current DHI chain quotes before placing a trade.
Frequently asked questions
- What is a straddle on DHI?
- A straddle on DHI is the straddle strategy applied to DHI (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 DHI stock trading near $135.49, the strikes shown on this page are snapped to the nearest listed DHI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DHI 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 DHI straddle priced from the end-of-day chain at a 30-day expiry (ATM IV 36.40%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$1,081.42 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DHI straddle?
- The breakeven for the DHI straddle priced on this page is roughly $124.00 and $146.00 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 DHI market-implied 1-standard-deviation expected move is approximately 10.44%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a straddle on DHI?
- Straddles on DHI are pure-volatility plays that profit from large moves in either direction; traders typically buy DHI 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 DHI implied volatility affect this straddle?
- DHI ATM IV is at 36.40% with IV rank near 29.56%, 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.