Three legs determine the collar strategy payoff
A collar combines shares, a long put and a short call on the same underlying. The put establishes an expiration floor; the call funds part of its cost and caps the stock sale price. The floor is a sale value, not a promise that the position cannot lose money. Purchase price, premiums and fees determine the actual profit or loss.
This calculator models equal coverage with standard 100-share contracts, a put strike below the call strike and one shared expiration. Partial hedges, uncovered calls, adjusted deliverables and different expirations require a different payoff calculation and are excluded here.
A $150 stock collar, including every cash flow
Assume 100 shares bought at $150, one $140 put bought for $3 per share, one $160 call sold for $2.50 per share, and $4 total fees. These are illustrative USD inputs, not market quotes. The stock costs $15,000, the put costs $300, and the call brings in $250. Net option cost is $50; total cash committed including fees is $15,054.
| Stock at expiry | Stock P/L | Put P/L | Short call P/L | Fees | Total P/L |
|---|---|---|---|---|---|
| $120 | -$3,000 | +$1,700 | +$250 | -$4 | -$1,054 |
| $140 | -$1,000 | -$300 | +$250 | -$4 | -$1,054 |
| $150.54 | +$54 | -$300 | +$250 | -$4 | $0 |
| $160 | +$1,000 | -$300 | +$250 | -$4 | +$946 |
| $180 | +$3,000 | -$300 | -$1,750 | -$4 | +$946 |
For N covered shares, stock basis B, expiration price S, put strike Kp, call strike Kc, put premium p, call premium c and total fees F:
P/L = N × [(S - B) + max(Kp - S, 0) - max(S - Kc, 0) + c - p] - F
Effective basis = B + p - c + F / N
Floor P/L = N × (Kp - effective basis)
Cap P/L = N × (Kc - effective basis)An interior breakeven exists only when the effective basis falls between the strikes. If it is below the put strike, every expiration outcome is profitable relative to the entered basis; if above the call strike, every outcome loses money. At either strike, a whole flat region breaks even. Historical purchase basis and the current value of already-owned shares answer different questions: use the former for lifetime P/L, or enter current value as basis to assess the hedge from today.
Protection cost versus the upside you give up
| Position | Option cash flow | Downside at expiry | Upside |
|---|---|---|---|
| Stock only | None | Can lose the stock investment | No option cap |
| Stock + put | Pay put premium | Floor at put strike, less premium and fees | No option cap |
| Stock + short call | Receive call premium | Premium cushions losses; no put floor | Capped by call strike |
| Collar | Pay put, receive call | Floor while matched hedge remains intact | Capped by call strike |
A higher put strike buys a higher floor but generally costs more with other inputs fixed. A lower call strike generally brings in more premium while surrendering more upside. Equal put and call premiums make the option premium net to zero; fees, spreads, stock capital and the upside cap still remain. Compare actual quotes, rather than assuming a wider or narrower collar will produce a credit.
Build and reconcile a collar in TradingView Options
- In Options Strategy Builder, create a strategy and include a long underlying position, a long put and a short call. Keep the underlying leg included in chart calculations.
- Set both option expirations to the same date. Match quantities using each contract's deliverable, not just the displayed count, and enter your stock purchase price.
- Choose price assumptions for each leg. TradingView permits bid, ask, mid or theoretical prices; a midpoint is not a guaranteed fill. Buying at the ask and selling at the bid gives a different cost from using two midpoints.
- Copy the strikes and premiums into this calculator, enter total fees, and check the floor, interior region and cap against the example above. Separate expiration payoff from theoretical P/L before expiry.
The local chain lookup supplies a limited contract sample and may have missing prices. Its reported day close can be stale and is not an executable bid or ask. After changing the expiration, select both legs again and confirm the inputs. Check the same underlying, expiration, multiplier, timestamp and quote side in Pineify's available options chain before comparing results. Neither scenario chart establishes a historical options backtest.
Assignment can change the position before the hedge expires
An American-style short call can be assigned early, particularly around an ex-dividend date. Delivery of the shares leaves a long put behind; that is no longer the original three-leg collar. Selling the stock separately can leave an uncovered call. Closing the put early removes the floor. Corporate actions can change the contract deliverable.
Near either strike, confirm exercise instructions, broker deadlines and the resulting shares or cash position. Protection ends with the put; retaining shares afterward restores their downside exposure. This calculator assumes the three legs remain intact through a shared expiry and excludes dividends, financing, taxes and uncertain early assignment. The pre-expiry model assumes European exercise, constant IV and no dividends.
Record the assumptions before comparing outcomes
Use AI Stocks & Options Picker to inspect available calls, puts and their contract details. In Trading Journal, record the three quantities, stock basis, each premium and timestamp, total fees, planned expiry action and any assignment. Keep scenario estimates separate from executed trades and reconcile broker fills before calculating realized P/L. Continue with the TradingView strategies guide for other strategy workflows.
Educational scenarios only, not investment advice. Options involve risk; the payoff limits depend on the stated quantities, contract terms and holding assumptions.
Sources and model scope
Reviewed October 18, 2026: OIC protective collar mechanics and assignment risks; TradingView Options Strategy Builder documentation; Fidelity collar cash flows and expiration outcomes. The cash-flow example is calculated from the stated inputs; no performance or execution outcome is implied.