Options Collar Strategy Calculator
A collar wraps a long stock holding in a protective put and a financing short call, fixing both a floor and a ceiling on the outcome at expiration. It is a popular way to lock in gains on an appreciated position at low or zero net option cost. This calculator takes the stock purchase price, the put strike, the call strike, both premiums, and the number of shares, then returns the net option cost, the maximum profit, the maximum loss, and the breakeven stock price so you can see the full payoff range before committing.
Collar formula
Net option cost per share = put premium - call premium
Breakeven = stock price + net option cost per share
Max profit per share = call strike - stock price - net option cost per share
Max loss per share = stock price - put strike + net option cost per share
Totals = per-share figure * number of shares
A negative net option cost means the collar was set up for a credit. Maximum profit is capped at the call strike; maximum loss is floored at the put strike.
Using the result
- The protective put sets the worst-case exit value; the short call funds it but caps the upside.
- A zero-cost collar is achieved when the call premium equals the put premium.
- Widening the gap between strikes loosens both the cap and the floor.
- Collars are common for protecting appreciated stock without selling it and triggering a taxable event.
- Add commissions and any dividend assumptions for a precise live-trade result.
Collar strategy: frequently asked questions
What is a collar strategy?
A collar protects a long stock position by buying an out-of-the-money put for downside protection and selling an out-of-the-money call to finance it. It caps both the downside (at the put strike) and the upside (at the call strike), creating a defined range of outcomes at expiration.
How do you calculate the net cost of a collar?
The net option cost per share equals the put premium paid minus the call premium received. If the call premium exceeds the put premium the collar is established for a net credit; if the put costs more it is a net debit. Multiply by shares to get the total dollar cost.
What is the maximum profit on a collar?
Maximum profit per share equals the call strike minus the stock purchase price, minus the net option cost per share. It is realized when the stock finishes at or above the call strike, where the short call caps further upside. Multiply by the number of shares for the total.
What is the maximum loss on a collar?
Maximum loss per share equals the stock purchase price minus the put strike, plus the net option cost per share. It occurs when the stock finishes at or below the put strike, where the protective put limits further downside. The put sets a floor on the position's value.
What is the collar breakeven price?
The breakeven stock price at expiration equals the stock purchase price plus the net option cost per share (or minus the net credit). Above breakeven the position is profitable up to the capped maximum; below it the position loses down to the capped maximum loss.
Official sources
- U.S. SEC Investor.gov: Options glossary.
- The Options Clearing Corporation (OCC): Standardized options education.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.