Collar Strategy Calculator
This calculator models a protective collar: long stock combined with a long put (downside protection) and a short call (upside cap). Use it to estimate net cash outlay, breakeven, and the capped upside or limited downside given your strikes and option premiums.
The tool is intended for scenario analysis and planning. It does not execute trades, predict fills, or model early assignment probability. Always cross-check live market prices and broker fees before placing trades.
Calculates cash flows and payoff limits for a protective collar built on a long stock position using provided option prices and strikes.
Inputs
Results
Breakeven price
$100.02
Max loss per share
$5.02
Max gain per share
$5.02
Net premium per share
$0.02
Initial cash outlay
$10,002.00
| Output | Value | Unit |
|---|---|---|
| Breakeven price | $100.02 | USD |
| Max loss per share | $5.02 | USD |
| Max gain per share | $5.02 | USD |
| Net premium per share | $0.02 | USD |
| Initial cash outlay | $10,002.00 | USD |
Visualization
Methodology
Calculations use straightforward cash-flow accounting: purchase cost of the underlying plus option premiums paid minus option premiums received, adjusted for per-contract commissions.
Risk limits (maximum loss and capped gain) are computed at expiry assuming options are held to expiration and exercised only at or beyond strike prices. This approach follows general model-validation practices recommended by standards bodies for risk calculations and documentation.
Model validation and operational controls should follow recognised frameworks such as the NIST Risk Management Framework for model governance, ISO risk-management guidance for documentation, and IEEE principles for software accuracy and reproducibility where applicable.
Worked examples
Example: Buy 100 shares at $100, buy 1 put (strike $95) paying $2.50, sell 1 call (strike $105) receiving $2.50, commissions $1/contract. Net premium ≈ commissions net; breakeven remains near $100.
Zero-cost target: if you want a zero net premium, the tool's optimizer estimates the short-call premium required to offset put cost, ignoring market liquidity and rounding to permitted option increments.
Further resources
External guidance
Expert Q&A
Is this financial advice?
No. This calculator provides informational estimates only and is not investment advice. Consult a licensed advisor for personalized guidance.
Does the calculator include early assignment or dividends?
No. Results assume options are held to expiration and do not model early assignment, dividend adjustments, or margin costs. Include those factors separately when relevant.
How accurate are the results?
Accuracy depends on the accuracy of inputs (live prices, exact commissions, contract size). The tool provides deterministic arithmetic calculations; it does not model fill slippage, order routing differences, or exchange fees. Use it for planning and perform validation against live broker quotes.
Which standards does this tool follow for validation and documentation?
Model governance and validation recommendations referenced include NIST risk-management guidance, ISO risk-management standards, and IEEE guidance for software and numerical reproducibility. These are referenced for best-practice documentation and controls, not as financial regulatory endorsement.
Sources & citations
- NIST - Risk Management — https://www.nist.gov
- ISO 31000 - Risk management — https://www.iso.org/iso-31000-risk-management.html
- IEEE Standards Association — https://standards.ieee.org
- U.S. Occupational Safety and Health Administration (for general organizational controls guidance) — https://www.osha.gov
- U.S. Securities and Exchange Commission - Investor Education — https://www.sec.gov/investor