DEM Collar Strategy
DEM (WisdomTree Emerging Markets High Dividend Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
Under normal circumstances, at least 95% of the fund's total assets (exclusive of collateral held from securities lending) will be invested in component securities of the index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities. The index is a fundamentally weighted index that is comprised of the highest dividend-yielding common stocks selected from the WisdomTree Emerging Markets Dividend Index. The fund is non-diversified.
DEM (WisdomTree Emerging Markets High Dividend Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $3.69B, a beta of 0.70 versus the broader market, a 52-week range of 43.64-54.84, average daily share volume of 254K, a public-listing history dating back to 2007. These structural characteristics shape how DEM etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.70 places DEM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. DEM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on DEM?
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 DEM snapshot
As of May 15, 2026, spot at $52.88, ATM IV 17.80%, IV rank 16.34%, expected move 5.10%. The collar on DEM 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 DEM specifically: IV regime affects collar pricing on both sides; compressed DEM IV at 17.80% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 5.10% (roughly $2.70 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 DEM expiries trade a higher absolute premium for lower per-day decay. Position sizing on DEM should anchor to the underlying notional of $52.88 per share and to the trader's directional view on DEM etf.
DEM collar setup
The DEM 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 DEM near $52.88, the first option leg uses a $56.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DEM 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 DEM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $52.88 | long |
| Sell 1 | Call | $56.00 | $0.25 |
| Buy 1 | Put | $50.00 | $0.21 |
DEM collar risk and reward
- Net Premium / Debit
- -$5,284.00
- Max Profit (per contract)
- $316.00
- Max Loss (per contract)
- -$284.00
- Breakeven(s)
- $52.84
- Risk / Reward Ratio
- 1.113
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.
DEM collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on DEM. 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% | -$284.00 |
| $11.70 | -77.9% | -$284.00 |
| $23.39 | -55.8% | -$284.00 |
| $35.08 | -33.7% | -$284.00 |
| $46.77 | -11.5% | -$284.00 |
| $58.46 | +10.6% | +$316.00 |
| $70.16 | +32.7% | +$316.00 |
| $81.85 | +54.8% | +$316.00 |
| $93.54 | +76.9% | +$316.00 |
| $105.23 | +99.0% | +$316.00 |
When traders use collar on DEM
Collars on DEM hedge an existing long DEM 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.
DEM thesis for this collar
The market-implied 1-standard-deviation range for DEM extends from approximately $50.18 on the downside to $55.58 on the upside. A DEM collar hedges an existing long DEM 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 DEM IV rank near 16.34% 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 DEM at 17.80%. As a Financial Services name, DEM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DEM-specific events.
DEM 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. DEM positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DEM alongside the broader basket even when DEM-specific fundamentals are unchanged. Always rebuild the position from current DEM chain quotes before placing a trade.
Frequently asked questions
- What is a collar on DEM?
- A collar on DEM is the collar strategy applied to DEM (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 DEM etf trading near $52.88, the strikes shown on this page are snapped to the nearest listed DEM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DEM 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 DEM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 17.80%), the computed maximum profit is $316.00 per contract and the computed maximum loss is -$284.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DEM collar?
- The breakeven for the DEM collar priced on this page is roughly $52.84 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 DEM market-implied 1-standard-deviation expected move is approximately 5.10%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on DEM?
- Collars on DEM hedge an existing long DEM 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 DEM implied volatility affect this collar?
- DEM ATM IV is at 17.80% with IV rank near 16.34%, 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.