NEUTRAL
Collar Strategy Lab
What is a collar?
A collar combines a covered call with a protective put: you own the stock, buy a put for downside protection, and sell a call to help fund it.
This caps both your upside and downside, creating a defined risk/reward range — ideal for protecting unrealized gains at low or no cost.
Execution Legs:
1
Own 100 shares of the stock.
2
Buy a put at a lower strike (the floor).
3
Sell a call at a higher strike (the ceiling) to help pay for the put.
NeutralProtectionLimited Loss
Institutional Playbook & Ideal Timing
🎯 Ideal Timing & Volatility Environment:
High IV regime (IV Rank > 50%) where options premiums are overpriced. Ideal right before/after earnings for IV crush, during elevated market fear/VIX spikes, or in rangebound consolidation between Put and Call Walls.
🎯 Strike & DTE Target:
30 to 45 DTE. Sell ATM or 20-delta strikes outside the 1σ expected move cone.
🛡️ Exit & Risk Rules:
Take profit at 50% of max profit (for credit/neutral) or 100%–200% ROI (for debit). Cut losses at 100% of debit paid (or 2x credit collected). Close before expiration if delta expands beyond 70.
Greeks Sensitivity & Mechanics
⚡ +Vega (Long Vol)
Benefits from IV expansion. Hurt by post-earnings IV crush.
⏳ −Theta (Decay Cost)
Loses premium value every day; needs swift price displacement.
🚀 +Gamma (Convexity)
Profit accelerates as underlying moves further in your direction.
Directional Bias (Δ)
Delta-Neutral (Δ ≈ 0): Directionless; relies on vol or decay.
Interactive Payoff Simulator
Expiration Payoff
Interactive Parameters
Stock Price ($)
$100.00
Days to Expiry (DTE)
30 Days
Lower Strike A ($)
$90.00
Higher Strike B ($)
$110.00
Max Profit
$1000.00
Max Loss
$1000.00
Breakeven
$100.00
Risk / Reward
1 : 1.50
Net Delta (Δ)
+0.05
Net Gamma (Γ)
+0.015
Net Theta (Θ)
-1.80
Net Vega (ν)
+3.50