LABU Collar Strategy
LABU (Direxion Daily S&P Biotech Bull 3X ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The Direxion Daily S&P Biotech Bull and Bear 3X ETFs seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse (or opposite), of the performance of the S&P Biotechnology Select Industry Index. There is no guarantee the funds will achieve their stated investment objectives.
LABU (Direxion Daily S&P Biotech Bull 3X ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $1.04B, a beta of 3.21 versus the broader market, a 52-week range of 44.685-212.45, average daily share volume of 619K, a public-listing history dating back to 2015. These structural characteristics shape how LABU etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 3.21 indicates LABU has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. LABU pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on LABU?
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 LABU snapshot
As of May 13, 2026, spot at $195.63, ATM IV 88.60%, IV rank 39.05%, expected move 25.40%. The collar on LABU 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 28-day expiry.
Why this collar structure on LABU specifically: IV regime affects collar pricing on both sides; mid-range LABU IV at 88.60% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 25.40% (roughly $49.69 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated LABU expiries trade a higher absolute premium for lower per-day decay. Position sizing on LABU should anchor to the underlying notional of $195.63 per share and to the trader's directional view on LABU etf.
LABU collar setup
The LABU 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 LABU near $195.63, the first option leg uses a $205.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LABU chain at a 28-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 LABU shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $195.63 | long |
| Sell 1 | Call | $205.00 | $6.25 |
| Buy 1 | Put | $186.00 | $23.90 |
LABU collar risk and reward
- Net Premium / Debit
- -$21,328.00
- Max Profit (per contract)
- -$828.00
- Max Loss (per contract)
- -$2,728.00
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- -0.304
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.
LABU collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on LABU. 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% | -$2,728.00 |
| $43.26 | -77.9% | -$2,728.00 |
| $86.52 | -55.8% | -$2,728.00 |
| $129.77 | -33.7% | -$2,728.00 |
| $173.03 | -11.6% | -$2,728.00 |
| $216.28 | +10.6% | -$828.00 |
| $259.53 | +32.7% | -$828.00 |
| $302.79 | +54.8% | -$828.00 |
| $346.04 | +76.9% | -$828.00 |
| $389.29 | +99.0% | -$828.00 |
When traders use collar on LABU
Collars on LABU hedge an existing long LABU 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.
LABU thesis for this collar
The market-implied 1-standard-deviation range for LABU extends from approximately $145.94 on the downside to $245.32 on the upside. A LABU collar hedges an existing long LABU 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 LABU IV rank near 39.05% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on LABU should anchor more to the directional view and the expected-move geometry. As a Financial Services name, LABU options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LABU-specific events.
LABU 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. LABU positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move LABU alongside the broader basket even when LABU-specific fundamentals are unchanged. Always rebuild the position from current LABU chain quotes before placing a trade.
Frequently asked questions
- What is a collar on LABU?
- A collar on LABU is the collar strategy applied to LABU (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 LABU etf trading near $195.63, the strikes shown on this page are snapped to the nearest listed LABU chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are LABU 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 LABU collar priced from the end-of-day chain at a 30-day expiry (ATM IV 88.60%), the computed maximum profit is -$828.00 per contract and the computed maximum loss is -$2,728.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a LABU collar?
- The breakeven for the LABU 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 LABU market-implied 1-standard-deviation expected move is approximately 25.40%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on LABU?
- Collars on LABU hedge an existing long LABU 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 LABU implied volatility affect this collar?
- LABU ATM IV is at 88.60% with IV rank near 39.05%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.