Collar Strategy Payoff Calculator
A collar protects a stock holding: you buy a put below the current price to limit downside and sell a call above it to fund the put, capping your upside in exchange. This calculator shows the maximum profit, maximum loss, breakeven and the profit or loss at any expiration price. Enter your stock purchase price, the put and call strikes, the premiums and the share count.
Collar payoff formula
Net cost = put premium - call premium (per share)
Stock P/L = (price - purchase price) * shares
Put payoff = +max(0, put strike - price) * shares
Call payoff = -max(0, price - call strike) * shares
Premium flow = -net cost * shares
Total P/L = Stock P/L + Put payoff + Call payoff + Premium flow
Max profit = (call strike - purchase price - net cost) * shares
Max loss = (purchase price - put strike + net cost) * shares
Breakeven = purchase price + net cost
Worked example
Buy at $100, put strike $95 for $3, call strike $110 for $2, 100 shares. Net cost = 3 - 2 = $1 per share. If the stock closes at $105: stock P/L = (105 - 100) * 100 = $500; put and call both expire worthless; premium flow = -1 * 100 = -$100. Total P/L = $400.00. Maximum profit = (110 - 100 - 1) * 100 = $900.00. Maximum loss = (100 - 95 + 1) * 100 = $600.00. Breakeven = 100 + 1 = $101.00.
Collar strategy: frequently asked questions
What is a collar?
A collar is a hedged stock position: you own 100 shares per contract, buy a protective put below the current price, and sell a covered call above it. The call premium helps pay for the put. The put sets a floor on losses; the call caps gains. A zero-cost collar is one where the call premium fully offsets the put cost.
What are the maximum profit and loss?
Maximum profit = (call strike - purchase price - net cost) * shares, reached at or above the call strike. Maximum loss = (purchase price - put strike + net cost) * shares, reached at or below the put strike. Net cost is the put premium paid minus the call premium received, per share.
What is the breakeven of a collar?
Breakeven is the stock purchase price plus the net cost per share (put premium paid minus call premium received). If the collar is established for a net credit, breakeven is below the purchase price.
Sources and method
- U.S. Securities and Exchange Commission investor education on options: Investor.gov: Options.
- Options Clearing Corporation: theocc.com.
- Payoff is the standard sum of stock, long put and short call expiration values; no proprietary data is used.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.