TMHC Butterfly Strategy
TMHC (Taylor Morrison Home Corporation), in the Consumer Cyclical sector, (Residential Construction industry), listed on NYSE.
Taylor Morrison Home Corporation, together with its subsidiaries, operates as a public homebuilder in the United States. The company designs, builds, and sells single and multi-family detached and attached homes; and develops lifestyle and master-planned communities. It also develops and constructs multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand name; and offers title insurance and closing settlement services, as well as financial services. In addition, the company operates under the Taylor Morrison, William Lyon Signature, and Darling Homes brand names in Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. Taylor Morrison Home Corporation was founded in 1936 and is headquartered in Scottsdale, Arizona.
TMHC (Taylor Morrison Home Corporation) trades in the Consumer Cyclical sector, specifically Residential Construction, with a market capitalization of approximately $5.30B, a trailing P/E of 8.11, a beta of 1.51 versus the broader market, a 52-week range of 54.58-72.5, average daily share volume of 1.3M, a public-listing history dating back to 2013, approximately 3K full-time employees. These structural characteristics shape how TMHC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.51 indicates TMHC has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 8.11 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price.
What is a butterfly on TMHC?
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 TMHC snapshot
As of May 15, 2026, spot at $55.07, ATM IV 39.20%, IV rank 5.67%, expected move 11.24%. The butterfly on TMHC 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 TMHC specifically: TMHC IV at 39.20% is on the cheap side of its 1-year range, which favors premium-buying structures like a TMHC butterfly, with a market-implied 1-standard-deviation move of approximately 11.24% (roughly $6.19 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 TMHC expiries trade a higher absolute premium for lower per-day decay. Position sizing on TMHC should anchor to the underlying notional of $55.07 per share and to the trader's directional view on TMHC stock.
TMHC butterfly setup
The TMHC 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 TMHC near $55.07, the first option leg uses a $52.32 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TMHC 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 TMHC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $52.32 | N/A |
| Sell 2 | Call | $55.07 | N/A |
| Buy 1 | Call | $57.82 | N/A |
TMHC 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.
TMHC butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on TMHC. 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 TMHC
Butterflies on TMHC are pinning bets - traders use them when they expect TMHC 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.
TMHC thesis for this butterfly
The market-implied 1-standard-deviation range for TMHC extends from approximately $48.88 on the downside to $61.26 on the upside. A TMHC long call butterfly is a pinning play: it pays maximum at the middle strike if TMHC settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current TMHC IV rank near 5.67% 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 TMHC at 39.20%. As a Consumer Cyclical name, TMHC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TMHC-specific events.
TMHC 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. TMHC positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TMHC alongside the broader basket even when TMHC-specific fundamentals are unchanged. Always rebuild the position from current TMHC chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on TMHC?
- A butterfly on TMHC is the butterfly strategy applied to TMHC (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 TMHC stock trading near $55.07, the strikes shown on this page are snapped to the nearest listed TMHC chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TMHC 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 TMHC butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 39.20%), 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 TMHC butterfly?
- The breakeven for the TMHC 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 TMHC market-implied 1-standard-deviation expected move is approximately 11.24%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on TMHC?
- Butterflies on TMHC are pinning bets - traders use them when they expect TMHC 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 TMHC implied volatility affect this butterfly?
- TMHC ATM IV is at 39.20% with IV rank near 5.67%, 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.