TARA Butterfly Strategy
TARA (Protara Therapeutics, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Protara Therapeutics, Inc., a clinical-stage biopharmaceutical company, engages in the identifying and advancing transformative therapies for the treatment of cancer and rare diseases. The company's lead program is TARA-002, an investigational cell therapy for the treatment of lymphatic malformations. It also develops intravenous choline chloride, an investigational phospholipid substrate replacement therapy for the treatment of intestinal failure associated liver disease. The company was formerly known as ArTara Therapeutics, Inc. and changed its name to Protara Therapeutics, Inc. in May 2020. Protara Therapeutics, Inc. is headquartered in New York, New York.
TARA (Protara Therapeutics, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $200.7M, a beta of 1.53 versus the broader market, a 52-week range of 2.77-7.82, average daily share volume of 937K, a public-listing history dating back to 2014, approximately 28 full-time employees. These structural characteristics shape how TARA stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.53 indicates TARA 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 TARA?
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 TARA snapshot
As of May 15, 2026, spot at $5.17, ATM IV 83.00%, IV rank 13.32%, expected move 23.80%. The butterfly on TARA 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 butterfly structure on TARA specifically: TARA IV at 83.00% is on the cheap side of its 1-year range, which favors premium-buying structures like a TARA butterfly, with a market-implied 1-standard-deviation move of approximately 23.80% (roughly $1.23 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 TARA expiries trade a higher absolute premium for lower per-day decay. Position sizing on TARA should anchor to the underlying notional of $5.17 per share and to the trader's directional view on TARA stock.
TARA butterfly setup
The TARA 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 TARA near $5.17, the first option leg uses a $4.91 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TARA 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 TARA shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $4.91 | N/A |
| Sell 2 | Call | $5.17 | N/A |
| Buy 1 | Call | $5.43 | N/A |
TARA butterfly 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
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.
TARA butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on TARA. 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 butterfly on TARA
Butterflies on TARA are pinning bets - traders use them when they expect TARA 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.
TARA thesis for this butterfly
The market-implied 1-standard-deviation range for TARA extends from approximately $3.94 on the downside to $6.40 on the upside. A TARA long call butterfly is a pinning play: it pays maximum at the middle strike if TARA settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TARA IV rank near 13.32% 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 TARA at 83.00%. As a Healthcare name, TARA options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TARA-specific events.
TARA 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. TARA positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TARA alongside the broader basket even when TARA-specific fundamentals are unchanged. Always rebuild the position from current TARA chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on TARA?
- A butterfly on TARA is the butterfly strategy applied to TARA (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 TARA stock trading near $5.17, the strikes shown on this page are snapped to the nearest listed TARA chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TARA 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 TARA butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 83.00%), 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 TARA butterfly?
- The breakeven for the TARA butterfly 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 TARA market-implied 1-standard-deviation expected move is approximately 23.80%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on TARA?
- Butterflies on TARA are pinning bets - traders use them when they expect TARA 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 TARA implied volatility affect this butterfly?
- TARA ATM IV is at 83.00% with IV rank near 13.32%, 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.