NEO Strangle Strategy
NEO (NeoGenomics, Inc.), in the Healthcare sector, (Medical - Diagnostics & Research industry), listed on NASDAQ.
NeoGenomics, Inc. operates a network of cancer-focused testing laboratories in the United States, Europe, and Asia. It operates through, Clinical Services and Pharma Services segments. The company offers testing services to hospitals, reference labs, pathologists, oncologists, clinicians, pharmaceutical firms, and researchers. It provides cytogenetics testing services to study normal and abnormal chromosomes and their relationship to diseases; fluorescence in-situ hybridization testing services that focus on detecting and locating the presence or absence of specific DNA sequences and genes on chromosomes; flow cytometry testing services to measure the characteristics of cell populations; and immunohistochemistry and digital imaging testing services to localize cellular proteins in tissue section, as well as to allow clients to visualize scanned slides, and perform quantitative analysis for various stains. The company also provides molecular testing services, which focus on the analysis of DNA and/or RNA, and the structure and function of genes at the molecular level; morphologic analysis, which is the process of analyzing cells under the microscope by a pathologist for the purpose of diagnosis; and testing services in support of its pharmaceutical clients' oncology programs covering discovery and commercialization, as well as acts as a reference laboratory supplying anatomic pathology testing services. It has a strategic alliance agreement and laboratory services agreement with Inivata Limited.
NEO (NeoGenomics, Inc.) trades in the Healthcare sector, specifically Medical - Diagnostics & Research, with a market capitalization of approximately $215.1M, a beta of 1.80 versus the broader market, a 52-week range of 4.72-13.74, average daily share volume of 2.1M, a public-listing history dating back to 2004, approximately 2K full-time employees. These structural characteristics shape how NEO stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.80 indicates NEO has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a strangle on NEO?
A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money.
Current NEO snapshot
As of May 15, 2026, spot at $8.29, ATM IV 76.30%, IV rank 14.57%, expected move 21.87%. The strangle on NEO 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 strangle structure on NEO specifically: NEO IV at 76.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a NEO strangle, with a market-implied 1-standard-deviation move of approximately 21.87% (roughly $1.81 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 NEO expiries trade a higher absolute premium for lower per-day decay. Position sizing on NEO should anchor to the underlying notional of $8.29 per share and to the trader's directional view on NEO stock.
NEO strangle setup
The NEO strangle below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With NEO near $8.29, the first option leg uses a $8.70 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NEO 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 NEO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $8.70 | N/A |
| Buy 1 | Put | $7.88 | N/A |
NEO strangle risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit.
NEO strangle payoff curve
Modeled P&L at expiration across a range of underlying prices for the strangle on NEO. 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.
When traders use strangle on NEO
Strangles on NEO are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the NEO chain.
NEO thesis for this strangle
The market-implied 1-standard-deviation range for NEO extends from approximately $6.48 on the downside to $10.10 on the upside. A NEO long strangle is the OTM cousin of the straddle: lower up-front cost but the underlying has to travel further past either OTM strike before the position turns profitable at expiration. Current NEO IV rank near 14.57% 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 NEO at 76.30%. As a Healthcare name, NEO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NEO-specific events.
NEO strangle positions are structurally neutral / high-volatility (long premium, OTM); 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. NEO positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NEO alongside the broader basket even when NEO-specific fundamentals are unchanged. Always rebuild the position from current NEO chain quotes before placing a trade.
Frequently asked questions
- What is a strangle on NEO?
- A strangle on NEO is the strangle strategy applied to NEO (stock). The strategy is structurally neutral / high-volatility (long premium, OTM): A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money. With NEO stock trading near $8.29, the strikes shown on this page are snapped to the nearest listed NEO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NEO strangle max profit and max loss calculated?
- Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit. For the NEO strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 76.30%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a NEO strangle?
- The breakeven for the NEO strangle priced on this page is no defined breakeven on the modeled curve 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 NEO market-implied 1-standard-deviation expected move is approximately 21.87%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a strangle on NEO?
- Strangles on NEO are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the NEO chain.
- How does current NEO implied volatility affect this strangle?
- NEO ATM IV is at 76.30% with IV rank near 14.57%, 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.