REI Straddle Strategy
REI (Ring Energy, Inc.), in the Energy sector, (Oil & Gas Exploration & Production industry), listed on AMEX.
Ring Energy, Inc., an exploration and production company, engages in the acquisition, exploration, development, and production of oil and natural gas in Texas and New Mexico. As of December 31, 2021, the company's proved reserves consisted of approximately 77.8 million barrel of oil equivalent. It also had interests in 18,882 net developed acres and 1,406 net undeveloped acres in Andrews and Gaines counties, Texas; 18,437 net developed acres in Culberson and Reeves counties, Texas; and 13,662 net developed acres and 11,993 net undeveloped acres in Yoakum, Runnels, and Coke Counties, Texas and Lea County, New Mexico. Ring Energy, Inc. primarily sells its oil and natural gas production to end users, marketers, and other purchasers. The company was formerly known as Transglobal Mining Corp. and changed its name to Ring Energy, Inc. in March 2008. Ring Energy, Inc. was incorporated in 2004 and is headquartered in The Woodlands, Texas.
REI (Ring Energy, Inc.) trades in the Energy sector, specifically Oil & Gas Exploration & Production, with a market capitalization of approximately $263.9M, a beta of 0.93 versus the broader market, a 52-week range of 0.72-2, average daily share volume of 5.2M, a public-listing history dating back to 2007, approximately 115 full-time employees. These structural characteristics shape how REI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.93 places REI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a straddle on REI?
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 REI snapshot
As of May 15, 2026, spot at $1.35, ATM IV 26.10%, IV rank 0.74%, expected move 7.48%. The straddle on REI 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 straddle structure on REI specifically: REI IV at 26.10% is on the cheap side of its 1-year range, which favors premium-buying structures like a REI straddle, with a market-implied 1-standard-deviation move of approximately 7.48% (roughly $0.10 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 REI expiries trade a higher absolute premium for lower per-day decay. Position sizing on REI should anchor to the underlying notional of $1.35 per share and to the trader's directional view on REI stock.
REI straddle setup
The REI 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 REI near $1.35, the first option leg uses a $1.35 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed REI 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 REI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $1.35 | N/A |
| Buy 1 | Put | $1.35 | N/A |
REI straddle 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 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.
REI straddle payoff curve
Modeled P&L at expiration across a range of underlying prices for the straddle on REI. 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 straddle on REI
Straddles on REI are pure-volatility plays that profit from large moves in either direction; traders typically buy REI straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
REI thesis for this straddle
The market-implied 1-standard-deviation range for REI extends from approximately $1.25 on the downside to $1.45 on the upside. A REI 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 REI IV rank near 0.74% 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 REI at 26.10%. As a Energy name, REI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to REI-specific events.
REI 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. REI positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move REI alongside the broader basket even when REI-specific fundamentals are unchanged. Always rebuild the position from current REI chain quotes before placing a trade.
Frequently asked questions
- What is a straddle on REI?
- A straddle on REI is the straddle strategy applied to REI (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 REI stock trading near $1.35, the strikes shown on this page are snapped to the nearest listed REI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are REI 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 REI straddle priced from the end-of-day chain at a 30-day expiry (ATM IV 26.10%), 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 REI straddle?
- The breakeven for the REI straddle 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 REI market-implied 1-standard-deviation expected move is approximately 7.48%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a straddle on REI?
- Straddles on REI are pure-volatility plays that profit from large moves in either direction; traders typically buy REI 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 REI implied volatility affect this straddle?
- REI ATM IV is at 26.10% with IV rank near 0.74%, 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.