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Collar calculator
Own stock, buy a put, sell a call. A defined-risk covered call.
OutlookBullish
Max profitLimited
Max lossLimited
LevelIntermediate
What is a collar?
A collar floors the stock with a long put and finances it by selling a call. Upside is capped at the short call. Often near even cost if the strikes are balanced.
Legs
- Own the underlying
- Buy a put at B
- Sell a call at A
Live example on SPY
Collar
Net debit$450.00
Max loss$4,903.50
Max profit$3,996.50
Chance of profitLocked: ProUpgrade
BreakevenAbove $760.04 (+0.6%)At expiration
- 711P+112/18 · $6.64
- 800C−112/18 · $2.14
- Long 100 shares at $755.53
With SPY at 755.53, on the Dec 18 expiration (49 days out): own 100 shares at $755.53, buy 1 711 put, and sell 1 800 call. Net debit $450. Max profit $3,996.50; max loss $4,903.50. Breakeven at expiration: Above $760.04 (+0.6%).
Open this collar in the calculator to move the strikes, change the date and implied volatility, and read profit and loss by price and date.
Questions
- What is a collar?
- A collar floors the stock with a long put and finances it by selling a call. Upside is capped at the short call. Often near even cost if the strikes are balanced.
- When does a collar make money?
- Own stock, buy a put, sell a call. A defined-risk covered call.
- What is the max profit of a collar?
- Limited: there is a ceiling on what it can make. The calculator gives the figure for your strikes and expiration.
- What is the max loss of a collar?
- Limited: there is a floor under what it can lose. The calculator gives the figure for your strikes and expiration.
- How do I calculate a collar's profit and loss?
- Open the collar in the strategy calculator. It places the legs on a real expiration, and you can drag the strikes, change the date, and read profit and loss by price and date, with max profit, max loss, and the breakevens.