How are TEM 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 TEM strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 66.30%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$466.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a TEM strangle?

The breakeven for the TEM strangle priced on this page is roughly $37.34 and $50.67 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 TEM market-implied 1-standard-deviation expected move is approximately 19.01%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current TEM implied volatility affect this strangle?

TEM ATM IV is at 66.30% with IV rank near 15.23%, 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.

TEM Strangle Strategy

TEM (Tempus AI, Inc.), in the Healthcare sector, (Medical - Healthcare Information Services industry), listed on NASDAQ.

Tempus AI, Inc. operates as a healthcare technology company. It engages in providing next generation sequencing diagnostics, polymerase chain reaction profiling, molecular genotyping, and other anatomic and molecular pathology testing to healthcare providers, pharmaceutical companies, biotechnology companies, researchers, and other third parties. The company offers Insights, a license library of linked clinical, molecular, and imaging de-identified data, as well as a suite of analytical services to analytic and cloud-and-compute tools to pharmaceutical and biotechnology companies; and Trials that provides clinical trial matching services to pharmaceutical companies. In addition, it operates Next; Algos, a suite of algorithmic tests in oncology; Hub, a desktop and mobile platform for ordering, managing, and receiving tests and patient results; and Lens, a platform for researchers and scientists to find, access, and analyze Tempus data. The company has a strategic collaborations agreement with AstraZeneca and Pathos AI, Inc. to develop therapeutic programs in oncology. The company was formerly known as Tempus Labs, Inc. and changed its name to Tempus AI, Inc. in January 2023.

TEM (Tempus AI, Inc.) trades in the Healthcare sector, specifically Medical - Healthcare Information Services, with a market capitalization of approximately $8.01B, a beta of 3.99 versus the broader market, a 52-week range of 41.73-104.32, average daily share volume of 5.7M, a public-listing history dating back to 2024, approximately 2K full-time employees. These structural characteristics shape how TEM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 3.99 indicates TEM 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 strangle on TEM?

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 TEM snapshot

As of May 15, 2026, spot at $44.27, ATM IV 66.30%, IV rank 15.23%, expected move 19.01%. The strangle on TEM 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 strangle structure on TEM specifically: TEM IV at 66.30% is on the cheap side of its 1-year range, which favors premium-buying structures like a TEM strangle, with a market-implied 1-standard-deviation move of approximately 19.01% (roughly $8.41 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 TEM expiries trade a higher absolute premium for lower per-day decay. Position sizing on TEM should anchor to the underlying notional of $44.27 per share and to the trader's directional view on TEM stock.

TEM strangle setup

The TEM 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 TEM near $44.27, the first option leg uses a $46.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TEM 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 TEM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 1	Call	$46.00	$2.54
Buy 1	Put	$42.00	$2.13

TEM strangle risk and reward

Net Premium / Debit: -$466.50
Max Profit (per contract): Unbounded
Max Loss (per contract): -$466.50
Breakeven(s): $37.34, $50.67
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.

TEM strangle payoff curve

Modeled P&L at expiration across a range of underlying prices for the strangle on TEM. 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%	+$3,732.50
$9.80	-77.9%	+$2,753.78
$19.58	-55.8%	+$1,775.05
$29.37	-33.7%	+$796.33
$39.16	-11.5%	-$182.39
$48.95	+10.6%	-$171.88
$58.73	+32.7%	+$806.84
$68.52	+54.8%	+$1,785.57
$78.31	+76.9%	+$2,764.29
$88.10	+99.0%	+$3,743.01

When traders use strangle on TEM

Strangles on TEM 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 TEM chain.

TEM thesis for this strangle

The market-implied 1-standard-deviation range for TEM extends from approximately $35.86 on the downside to $52.68 on the upside. A TEM 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 TEM IV rank near 15.23% 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 TEM at 66.30%. As a Healthcare name, TEM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TEM-specific events.

TEM 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. TEM positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TEM alongside the broader basket even when TEM-specific fundamentals are unchanged. Always rebuild the position from current TEM chain quotes before placing a trade.

Frequently asked questions

What is a strangle on TEM?: A strangle on TEM is the strangle strategy applied to TEM (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 TEM stock trading near $44.27, the strikes shown on this page are snapped to the nearest listed TEM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are TEM 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 TEM strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 66.30%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$466.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a TEM strangle?: The breakeven for the TEM strangle priced on this page is roughly $37.34 and $50.67 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 TEM market-implied 1-standard-deviation expected move is approximately 19.01%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a strangle on TEM?: Strangles on TEM 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 TEM chain.
How does current TEM implied volatility affect this strangle?: TEM ATM IV is at 66.30% with IV rank near 15.23%, 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.