BABX Collar Strategy
BABX (GraniteShares 2x Long BABA Daily ETF), in the Financial Services sector, (Asset Management industry), listed on NASDAQ.
The Fund seeks daily investment results, before fees and expenses, of 2 times (200%) the daily percentage change of the common stock of Alibaba Group Holding Limited, (NASDAQ: BABA) There is no guarantee that the Fund will meet its stated objective. The fund should not be expected to provide 2 times the cumulative return of BABA for periods greater than a day.
BABX (GraniteShares 2x Long BABA Daily ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $79.1M, a beta of 0.99 versus the broader market, a 52-week range of 20.682-66, average daily share volume of 712K, a public-listing history dating back to 2022. These structural characteristics shape how BABX etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.99 places BABX roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a collar on BABX?
A collar pairs long stock with a protective out-of-the-money put financed by a short out-of-the-money call, capping both tails of the position around the current spot.
Current BABX snapshot
As of May 15, 2026, spot at $26.63, ATM IV 78.60%, IV rank 18.35%, expected move 22.53%. The collar on BABX below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this collar structure on BABX specifically: IV regime affects collar pricing on both sides; compressed BABX IV at 78.60% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 22.53% (roughly $6.00 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated BABX expiries trade a higher absolute premium for lower per-day decay. Position sizing on BABX should anchor to the underlying notional of $26.63 per share and to the trader's directional view on BABX etf.
BABX collar setup
The BABX collar below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With BABX near $26.63, the first option leg uses a $28.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed BABX chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 BABX shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $26.63 | long |
| Sell 1 | Call | $28.00 | $2.15 |
| Buy 1 | Put | $25.00 | $1.98 |
BABX collar risk and reward
- Net Premium / Debit
- -$2,645.50
- Max Profit (per contract)
- $154.50
- Max Loss (per contract)
- -$145.50
- Breakeven(s)
- $26.46
- Risk / Reward Ratio
- 1.062
Max profit roughly equals short-call strike minus cost basis plus net premium; max loss roughly equals cost basis minus long-put strike minus net premium. Breakeven shifts by the net premium.
BABX collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on BABX. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$145.50 |
| $5.90 | -77.9% | -$145.50 |
| $11.78 | -55.7% | -$145.50 |
| $17.67 | -33.6% | -$145.50 |
| $23.56 | -11.5% | -$145.50 |
| $29.44 | +10.6% | +$154.50 |
| $35.33 | +32.7% | +$154.50 |
| $41.22 | +54.8% | +$154.50 |
| $47.11 | +76.9% | +$154.50 |
| $52.99 | +99.0% | +$154.50 |
When traders use collar on BABX
Collars on BABX hedge an existing long BABX etf position; the long put sets a floor while the short call finances it, often run as a near-zero-cost hedge during expected volatility windows.
BABX thesis for this collar
The market-implied 1-standard-deviation range for BABX extends from approximately $20.63 on the downside to $32.63 on the upside. A BABX collar hedges an existing long BABX position with a protective put while financing the put cost via a short call; when the premiums roughly offset, the collar acts as a near-zero-cost insurance band around the current spot. Current BABX IV rank near 18.35% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on BABX at 78.60%. As a Financial Services name, BABX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to BABX-specific events.
BABX collar positions are structurally neutral (protective); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. BABX positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move BABX alongside the broader basket even when BABX-specific fundamentals are unchanged. Always rebuild the position from current BABX chain quotes before placing a trade.
Frequently asked questions
- What is a collar on BABX?
- A collar on BABX is the collar strategy applied to BABX (etf). The strategy is structurally neutral (protective): A collar pairs long stock with a protective out-of-the-money put financed by a short out-of-the-money call, capping both tails of the position around the current spot. With BABX etf trading near $26.63, the strikes shown on this page are snapped to the nearest listed BABX chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are BABX collar max profit and max loss calculated?
- Max profit roughly equals short-call strike minus cost basis plus net premium; max loss roughly equals cost basis minus long-put strike minus net premium. Breakeven shifts by the net premium. For the BABX collar priced from the end-of-day chain at a 30-day expiry (ATM IV 78.60%), the computed maximum profit is $154.50 per contract and the computed maximum loss is -$145.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a BABX collar?
- The breakeven for the BABX collar priced on this page is roughly $26.46 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current BABX market-implied 1-standard-deviation expected move is approximately 22.53%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on BABX?
- Collars on BABX hedge an existing long BABX etf position; the long put sets a floor while the short call finances it, often run as a near-zero-cost hedge during expected volatility windows.
- How does current BABX implied volatility affect this collar?
- BABX ATM IV is at 78.60% with IV rank near 18.35%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.