TARS Strangle 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 strangle on TARS?
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 TARS snapshot
As of May 15, 2026, spot at $62.39, ATM IV 54.20%, IV rank 8.73%, expected move 15.54%. The strangle 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 strangle 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 strangle, 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 strangle setup
The TARS 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 TARS near $62.39, the first option leg uses a $65.00 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 | $65.00 | $4.78 |
| Buy 1 | Put | $60.00 | $4.35 |
TARS strangle risk and reward
- Net Premium / Debit
- -$912.50
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$912.50
- Breakeven(s)
- $50.88, $74.13
- Risk / Reward Ratio
- Unbounded
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.
TARS strangle payoff curve
Modeled P&L at expiration across a range of underlying prices for the strangle 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% | +$5,086.50 |
| $13.80 | -77.9% | +$3,707.13 |
| $27.60 | -55.8% | +$2,327.77 |
| $41.39 | -33.7% | +$948.40 |
| $55.18 | -11.5% | -$430.97 |
| $68.98 | +10.6% | -$514.67 |
| $82.77 | +32.7% | +$864.70 |
| $96.57 | +54.8% | +$2,244.07 |
| $110.36 | +76.9% | +$3,623.43 |
| $124.15 | +99.0% | +$5,002.80 |
When traders use strangle on TARS
Strangles on TARS 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 TARS chain.
TARS thesis for this strangle
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 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 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 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. 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 strangle on TARS?
- A strangle on TARS is the strangle strategy applied to TARS (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 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 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 TARS strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 54.20%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$912.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TARS strangle?
- The breakeven for the TARS strangle priced on this page is roughly $50.88 and $74.13 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 strangle on TARS?
- Strangles on TARS 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 TARS chain.
- How does current TARS implied volatility affect this strangle?
- 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.