FBT Collar Strategy
FBT (First Trust NYSE Arca Biotechnology Index Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The First Trust NYSE Arca Biotechnology Index Fund is an exchange-traded index fund. The investment objective of the Fund is to replicate as closely as possible, before fees and expenses, the price and yield of the NYSE Arca Biotechnology Index.
FBT (First Trust NYSE Arca Biotechnology Index Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $1.32B, a beta of 0.73 versus the broader market, a 52-week range of 152.98-224.94, average daily share volume of 89K, a public-listing history dating back to 2006. These structural characteristics shape how FBT etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.73 places FBT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FBT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on FBT?
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 FBT snapshot
As of May 15, 2026, spot at $207.53, ATM IV 23.70%, IV rank 2.36%, expected move 6.79%. The collar on FBT 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 FBT specifically: IV regime affects collar pricing on both sides; compressed FBT IV at 23.70% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.79% (roughly $14.10 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 FBT expiries trade a higher absolute premium for lower per-day decay. Position sizing on FBT should anchor to the underlying notional of $207.53 per share and to the trader's directional view on FBT etf.
FBT collar setup
The FBT 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 FBT near $207.53, the first option leg uses a $220.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FBT 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 FBT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $207.53 | long |
| Sell 1 | Call | $220.00 | $2.60 |
| Buy 1 | Put | $197.00 | $1.71 |
FBT collar risk and reward
- Net Premium / Debit
- -$20,664.00
- Max Profit (per contract)
- $1,336.00
- Max Loss (per contract)
- -$964.00
- Breakeven(s)
- $206.64
- Risk / Reward Ratio
- 1.386
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.
FBT collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on FBT. 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% | -$964.00 |
| $45.89 | -77.9% | -$964.00 |
| $91.78 | -55.8% | -$964.00 |
| $137.66 | -33.7% | -$964.00 |
| $183.55 | -11.6% | -$964.00 |
| $229.43 | +10.6% | +$1,336.00 |
| $275.32 | +32.7% | +$1,336.00 |
| $321.20 | +54.8% | +$1,336.00 |
| $367.09 | +76.9% | +$1,336.00 |
| $412.97 | +99.0% | +$1,336.00 |
When traders use collar on FBT
Collars on FBT hedge an existing long FBT 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.
FBT thesis for this collar
The market-implied 1-standard-deviation range for FBT extends from approximately $193.43 on the downside to $221.63 on the upside. A FBT collar hedges an existing long FBT 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 FBT IV rank near 2.36% 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 FBT at 23.70%. As a Financial Services name, FBT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FBT-specific events.
FBT 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. FBT positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FBT alongside the broader basket even when FBT-specific fundamentals are unchanged. Always rebuild the position from current FBT chain quotes before placing a trade.
Frequently asked questions
- What is a collar on FBT?
- A collar on FBT is the collar strategy applied to FBT (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 FBT etf trading near $207.53, the strikes shown on this page are snapped to the nearest listed FBT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FBT 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 FBT collar priced from the end-of-day chain at a 30-day expiry (ATM IV 23.70%), the computed maximum profit is $1,336.00 per contract and the computed maximum loss is -$964.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FBT collar?
- The breakeven for the FBT collar priced on this page is roughly $206.64 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 FBT market-implied 1-standard-deviation expected move is approximately 6.79%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on FBT?
- Collars on FBT hedge an existing long FBT 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 FBT implied volatility affect this collar?
- FBT ATM IV is at 23.70% with IV rank near 2.36%, 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.