RDVT Strangle Strategy
RDVT (Red Violet, Inc.), in the Technology sector, (Software - Application industry), listed on NASDAQ.
Red Violet, Inc. is a technology firm specializing in software and analytical services, leveraging its proprietary technology and advanced analytical prowess to deliver crucial identity intelligence solutions primarily within the United States. Among its flagship offerings is idiCORE, an investigative platform designed to tackle diverse corporate hurdles, including rigorous due diligence, proactive risk mitigation, robust identity verification, and adherence to regulatory mandates. Additionally, FOREWARN, an intuitive app-based tool, empowers professionals with immediate insights prior to in-person consumer interactions, thereby enabling them to promptly identify and reduce potential risks. Red Violet's client base spans a broad spectrum of industries, encompassing financial services, insurance, healthcare, retail, and telecommunications, alongside law enforcement bodies, government agencies, collections services, corporate security departments, and investigative organizations. Their solutions are instrumental in objectives such as comprehensive risk reduction, thorough due diligence, the prevention and detection of fraud, ensuring regulatory adherence, and facilitating strategic customer acquisition. The company employs a multi-faceted go-to-market strategy, engaging value-added distributors, resellers, and strategic alliances.
RDVT (Red Violet, Inc.) trades in the Technology sector, specifically Software - Application, with a market capitalization of approximately $850.5M, a trailing P/E of 60.68, a beta of 1.85 versus the broader market, a 52-week range of 33.4-64.135, average daily share volume of 155K, a public-listing history dating back to 2018, approximately 215 full-time employees. These structural characteristics shape how RDVT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.85 indicates RDVT has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 60.68 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. RDVT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a strangle on RDVT?
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 RDVT snapshot
As of June 29, 2026, spot at $62.58, ATM IV 40.70%, IV rank 3.06%, expected move 11.67%. The strangle on RDVT 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 18-day expiry.
Why this strangle structure on RDVT specifically: RDVT IV at 40.70% is on the cheap side of its 1-year range, which favors premium-buying structures like a RDVT strangle, with a market-implied 1-standard-deviation move of approximately 11.67% (roughly $7.30 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated RDVT expiries trade a higher absolute premium for lower per-day decay. Position sizing on RDVT should anchor to the underlying notional of $62.58 per share and to the trader's directional view on RDVT stock.
RDVT strangle setup
The RDVT 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 RDVT near $62.58, the first option leg uses a $65.71 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RDVT chain at a 18-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 RDVT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $65.71 | N/A |
| Buy 1 | Put | $59.45 | N/A |
RDVT 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.
RDVT strangle payoff curve
Modeled P&L at expiration across a range of underlying prices for the strangle on RDVT. 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 RDVT
Strangles on RDVT 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 RDVT chain.
RDVT thesis for this strangle
The market-implied 1-standard-deviation range for RDVT extends from approximately $55.28 on the downside to $69.88 on the upside. A RDVT 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 RDVT IV rank near 3.06% 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 RDVT at 40.70%. As a Technology name, RDVT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RDVT-specific events.
RDVT 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. RDVT positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RDVT alongside the broader basket even when RDVT-specific fundamentals are unchanged. Always rebuild the position from current RDVT chain quotes before placing a trade.
Frequently asked questions
- What is a strangle on RDVT?
- A strangle on RDVT is the strangle strategy applied to RDVT (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 RDVT stock trading near $62.58, the strikes shown on this page are snapped to the nearest listed RDVT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RDVT 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 RDVT strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 40.70%), 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 RDVT strangle?
- The breakeven for the RDVT 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 RDVT market-implied 1-standard-deviation expected move is approximately 11.67%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a strangle on RDVT?
- Strangles on RDVT 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 RDVT chain.
- How does current RDVT implied volatility affect this strangle?
- RDVT ATM IV is at 40.70% with IV rank near 3.06%, 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.