How are ERX 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 ERX collar priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 47.40%), the computed maximum profit is $373.50 per contract and the computed maximum loss is -$426.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ERX collar?

The breakeven for the ERX collar priced on this page is roughly $101.27 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The ERX market-implied 1-standard-deviation expected move in the same options snapshot is approximately 13.59%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ERX implied volatility affect this collar?

ERX ATM IV is at 47.40% with IV rank near 5.24%, 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.

ERX Collar Strategy

ERX (Direxion Daily Energy Bull 2X ETF), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.

The Direxion Daily Energy Bull and Bear 2X ETFs are structured to provide daily investment returns that correspond to twice (200%) the performance of the Energy Select Sector Index, before accounting for fees and other expenses. Specifically, the "Bull" version aims for double the index's positive daily movement, while the "Bear" counterpart targets two times the index's inverse (opposite) daily performance. It's crucial to understand, however, that there is no guarantee these funds will consistently achieve their stated investment objectives.

ERX (Direxion Daily Energy Bull 2X ETF) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $226.6M, a beta of -0.03 versus the broader market, a 52-week range of 50.5-110.78, average daily share volume of 332K, a public-listing history dating back to 2008. These structural characteristics shape how ERX etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of -0.03 indicates ERX has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. ERX pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on ERX?

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.

ERX snapshot

As of August 14, 2026, spot at $101.84, ATM IV 47.40%, IV rank 5.24%, expected move 13.59%. The collar on ERX below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.

Why this collar structure on ERX specifically: IV regime affects collar pricing on both sides; compressed ERX IV at 47.40% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 13.59% (roughly $13.84 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ERX expiries trade a higher absolute premium for lower per-day decay. Position sizing on ERX should anchor to the underlying notional of $101.84 per share and to the trader's directional view on ERX etf.

ERX collar setup

The ERX collar below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With ERX at $101.84 on that close, the first option leg uses a $105.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ERX chain at a 35-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 ERX shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$101.84	long
Sell 1	Call	$105.00	$4.35
Buy 1	Put	$97.00	$3.78

ERX collar risk and reward

Net Premium / Debit: -$10,126.50
Max Profit (per contract): $373.50
Max Loss (per contract): -$426.50
Breakeven(s): $101.27
Risk / Reward Ratio: 0.876

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.

ERX collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on ERX. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$426.50
$22.53	-77.9%	-$426.50
$45.04	-55.8%	-$426.50
$67.56	-33.7%	-$426.50
$90.08	-11.6%	-$426.50
$112.59	+10.6%	+$373.50
$135.11	+32.7%	+$373.50
$157.62	+54.8%	+$373.50
$180.14	+76.9%	+$373.50
$202.66	+99.0%	+$373.50

When traders use collar on ERX

Collars on ERX hedge an existing long ERX 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.

ERX thesis for this collar

The market-implied 1-standard-deviation range for ERX extends from approximately $88.00 on the downside to $115.68 on the upside. A ERX collar hedges an existing long ERX 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 ERX IV rank near 5.24% 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 ERX at 47.40%. As a Financial Services name, ERX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ERX-specific events.

ERX 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. ERX positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ERX alongside the broader basket even when ERX-specific fundamentals are unchanged. Always rebuild the position from current ERX chain quotes before placing a trade.

Frequently asked questions

What is a collar on ERX?: A collar on ERX is the collar strategy applied to ERX (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 ERX etf at $101.84 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed ERX chain strike and the premiums come straight from that session's bid/ask midpoint.
How are ERX 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 ERX collar priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 47.40%), the computed maximum profit is $373.50 per contract and the computed maximum loss is -$426.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ERX collar?: The breakeven for the ERX collar priced on this page is roughly $101.27 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The ERX market-implied 1-standard-deviation expected move in the same options snapshot is approximately 13.59%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on ERX?: Collars on ERX hedge an existing long ERX 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 ERX implied volatility affect this collar?: ERX ATM IV is at 47.40% with IV rank near 5.24%, 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.