TARS Butterfly Strategy
TARS (Tarsus Pharmaceuticals, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Tarsus Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the development and commercialization of novel therapeutic candidates for ophthalmic conditions. Its lead product candidate is TP-03, a novel therapeutic that is in Phase III for the treatment of blepharitis caused by the infestation of Demodex mites, as well as to treat meibomian gland disease. The company is also developing TP-04 for the treatment of rosacea; and TP-05 for Lyme prophylaxis and community malaria reduction. In addition, the company develops lotilaner to address diseases across therapeutic categories in human medicine, including eye care, dermatology, and other diseases. Tarsus Pharmaceuticals, Inc. was incorporated in 2016 and is headquartered in Irvine, California.
TARS (Tarsus Pharmaceuticals, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $2.78B, a beta of 0.53 versus the broader market, a 52-week range of 38.51-85.25, average daily share volume of 617K, a public-listing history dating back to 2020, approximately 323 full-time employees. These structural characteristics shape how TARS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.53 indicates TARS has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a butterfly on TARS?
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 TARS snapshot
As of May 15, 2026, spot at $62.39, ATM IV 54.20%, IV rank 8.73%, expected move 15.54%. The butterfly on TARS 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 63-day expiry.
Why this butterfly structure on TARS specifically: TARS IV at 54.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a TARS butterfly, with a market-implied 1-standard-deviation move of approximately 15.54% (roughly $9.69 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated TARS expiries trade a higher absolute premium for lower per-day decay. Position sizing on TARS should anchor to the underlying notional of $62.39 per share and to the trader's directional view on TARS stock.
TARS butterfly setup
The TARS 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 TARS near $62.39, the first option leg uses a $60.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TARS chain at a 63-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 TARS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $60.00 | $7.30 |
| Sell 2 | Call | $62.50 | $5.95 |
| Buy 1 | Call | $65.00 | $4.78 |
TARS butterfly risk and reward
- Net Premium / Debit
- -$17.50
- Max Profit (per contract)
- $211.65
- Max Loss (per contract)
- -$17.50
- Breakeven(s)
- $60.12, $64.95
- Risk / Reward Ratio
- 12.094
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.
TARS butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on TARS. 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 | -100.0% | -$17.50 |
| $13.80 | -77.9% | -$17.50 |
| $27.60 | -55.8% | -$17.50 |
| $41.39 | -33.7% | -$17.50 |
| $55.18 | -11.5% | -$17.50 |
| $68.98 | +10.6% | -$17.50 |
| $82.77 | +32.7% | -$17.50 |
| $96.57 | +54.8% | -$17.50 |
| $110.36 | +76.9% | -$17.50 |
| $124.15 | +99.0% | -$17.50 |
When traders use butterfly on TARS
Butterflies on TARS are pinning bets - traders use them when they expect TARS 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.
TARS thesis for this butterfly
The market-implied 1-standard-deviation range for TARS extends from approximately $52.70 on the downside to $72.08 on the upside. A TARS long call butterfly is a pinning play: it pays maximum at the middle strike if TARS settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TARS IV rank near 8.73% 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 TARS at 54.20%. As a Healthcare name, TARS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TARS-specific events.
TARS 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. TARS positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TARS alongside the broader basket even when TARS-specific fundamentals are unchanged. Always rebuild the position from current TARS chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on TARS?
- A butterfly on TARS is the butterfly strategy applied to TARS (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 TARS stock trading near $62.39, the strikes shown on this page are snapped to the nearest listed TARS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TARS 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 TARS butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 54.20%), the computed maximum profit is $211.65 per contract and the computed maximum loss is -$17.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TARS butterfly?
- The breakeven for the TARS butterfly priced on this page is roughly $60.12 and $64.95 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 TARS market-implied 1-standard-deviation expected move is approximately 15.54%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on TARS?
- Butterflies on TARS are pinning bets - traders use them when they expect TARS 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 TARS implied volatility affect this butterfly?
- TARS ATM IV is at 54.20% with IV rank near 8.73%, 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.