FEM Collar Strategy
FEM (First Trust Emerging Markets AlphaDEX Fund), in the Financial Services sector, (Asset Management industry), listed on NASDAQ.
The First Trust Emerging Markets AlphaDEX Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before the Fund's fees and expenses, of an equity index called the Nasdaq AlphaDEX Emerging Markets Index.
FEM (First Trust Emerging Markets AlphaDEX Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $626.5M, a beta of 0.88 versus the broader market, a 52-week range of 23.4-33.77, average daily share volume of 155K, a public-listing history dating back to 2011. These structural characteristics shape how FEM etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.88 places FEM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FEM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on FEM?
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 FEM snapshot
As of May 15, 2026, spot at $32.13, ATM IV 34.90%, IV rank 6.66%, expected move 10.01%. The collar on FEM 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 FEM specifically: IV regime affects collar pricing on both sides; compressed FEM IV at 34.90% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 10.01% (roughly $3.21 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 FEM expiries trade a higher absolute premium for lower per-day decay. Position sizing on FEM should anchor to the underlying notional of $32.13 per share and to the trader's directional view on FEM etf.
FEM collar setup
The FEM 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 FEM near $32.13, the first option leg uses a $33.74 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FEM 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 FEM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $32.13 | long |
| Sell 1 | Call | $33.74 | N/A |
| Buy 1 | Put | $30.52 | N/A |
FEM collar risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
FEM collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on FEM. 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.
When traders use collar on FEM
Collars on FEM hedge an existing long FEM 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.
FEM thesis for this collar
The market-implied 1-standard-deviation range for FEM extends from approximately $28.92 on the downside to $35.34 on the upside. A FEM collar hedges an existing long FEM 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 FEM IV rank near 6.66% 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 FEM at 34.90%. As a Financial Services name, FEM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FEM-specific events.
FEM 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. FEM positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FEM alongside the broader basket even when FEM-specific fundamentals are unchanged. Always rebuild the position from current FEM chain quotes before placing a trade.
Frequently asked questions
- What is a collar on FEM?
- A collar on FEM is the collar strategy applied to FEM (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 FEM etf trading near $32.13, the strikes shown on this page are snapped to the nearest listed FEM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FEM 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 FEM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 34.90%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FEM collar?
- The breakeven for the FEM collar priced on this page is no defined breakeven on the modeled curve 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 FEM market-implied 1-standard-deviation expected move is approximately 10.01%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on FEM?
- Collars on FEM hedge an existing long FEM 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 FEM implied volatility affect this collar?
- FEM ATM IV is at 34.90% with IV rank near 6.66%, 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.