SOUN Butterfly Strategy
SOUN (SoundHound AI, Inc.), in the Technology sector, (Software - Application industry), listed on NASDAQ.
SoundHound AI, Inc. develops independent voice artificial intelligence (AI) platform that enables businesses across industries to deliver high-quality conversational experiences to their customers. Its products include Houndify platform that offers a suite of Houndify tools to help brands build conversational voice assistants, such as automatic speech recognition, natural language understanding, wake words, custom domains, text-to-speech, and embedded voice solutions The company is headquartered in Santa Clara, California.
SOUN (SoundHound AI, Inc.) trades in the Technology sector, specifically Software - Application, with a market capitalization of approximately $3.59B, a beta of 2.76 versus the broader market, a 52-week range of 5.83-22.17, average daily share volume of 28.3M, a public-listing history dating back to 2022, approximately 842 full-time employees. These structural characteristics shape how SOUN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.76 indicates SOUN 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 butterfly on SOUN?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
Current SOUN snapshot
As of May 15, 2026, spot at $8.48, ATM IV 76.05%, IV rank 19.24%, expected move 21.80%. The butterfly on SOUN 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 butterfly structure on SOUN specifically: SOUN IV at 76.05% is on the cheap side of its 1-year range, which favors premium-buying structures like a SOUN butterfly, with a market-implied 1-standard-deviation move of approximately 21.80% (roughly $1.85 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 SOUN expiries trade a higher absolute premium for lower per-day decay. Position sizing on SOUN should anchor to the underlying notional of $8.48 per share and to the trader's directional view on SOUN stock.
SOUN butterfly setup
The SOUN butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With SOUN near $8.48, the first option leg uses a $8.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SOUN 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 SOUN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $8.00 | $0.88 |
| Sell 2 | Call | $8.50 | $0.66 |
| Buy 1 | Call | $9.00 | $0.48 |
SOUN butterfly risk and reward
- Net Premium / Debit
- -$4.50
- Max Profit (per contract)
- $42.74
- Max Loss (per contract)
- -$4.50
- Breakeven(s)
- $8.05
- Risk / Reward Ratio
- 9.498
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
SOUN butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on SOUN. 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 | -99.9% | -$4.50 |
| $1.88 | -77.8% | -$4.50 |
| $3.76 | -55.7% | -$4.50 |
| $5.63 | -33.6% | -$4.50 |
| $7.51 | -11.5% | -$4.50 |
| $9.38 | +10.6% | -$4.50 |
| $11.25 | +32.7% | -$4.50 |
| $13.13 | +54.8% | -$4.50 |
| $15.00 | +76.9% | -$4.50 |
| $16.87 | +99.0% | -$4.50 |
When traders use butterfly on SOUN
Butterflies on SOUN are pinning bets - traders use them when they expect SOUN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
SOUN thesis for this butterfly
The market-implied 1-standard-deviation range for SOUN extends from approximately $6.63 on the downside to $10.33 on the upside. A SOUN long call butterfly is a pinning play: it pays maximum at the middle strike if SOUN settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current SOUN IV rank near 19.24% 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 SOUN at 76.05%. As a Technology name, SOUN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SOUN-specific events.
SOUN butterfly positions are structurally neutral / pin (limited-risk, limited-reward); 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. SOUN positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SOUN alongside the broader basket even when SOUN-specific fundamentals are unchanged. Always rebuild the position from current SOUN chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on SOUN?
- A butterfly on SOUN is the butterfly strategy applied to SOUN (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With SOUN stock trading near $8.48, the strikes shown on this page are snapped to the nearest listed SOUN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SOUN butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the SOUN butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 76.05%), the computed maximum profit is $42.74 per contract and the computed maximum loss is -$4.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a SOUN butterfly?
- The breakeven for the SOUN butterfly priced on this page is roughly $8.05 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 SOUN market-implied 1-standard-deviation expected move is approximately 21.80%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on SOUN?
- Butterflies on SOUN are pinning bets - traders use them when they expect SOUN to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current SOUN implied volatility affect this butterfly?
- SOUN ATM IV is at 76.05% with IV rank near 19.24%, 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.