PILL Collar Strategy
PILL (Direxion Daily Pharmaceutical & Medical Bull 3X ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The Direxion Daily Pharmaceutical & Medical Bull 3X ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the S&P Pharmaceuticals Select Industry Index. There is no guarantee the fund will achieve its stated investment objective.
PILL (Direxion Daily Pharmaceutical & Medical Bull 3X ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $27.0M, a beta of 2.23 versus the broader market, a 52-week range of 4.72-14.25, average daily share volume of 88K, a public-listing history dating back to 2017. These structural characteristics shape how PILL etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.23 indicates PILL has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. PILL pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on PILL?
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 PILL snapshot
As of May 15, 2026, spot at $11.66, ATM IV 73.00%, IV rank 11.32%, expected move 20.93%. The collar on PILL 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 63-day expiry.
Why this collar structure on PILL specifically: IV regime affects collar pricing on both sides; compressed PILL IV at 73.00% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 20.93% (roughly $2.44 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated PILL expiries trade a higher absolute premium for lower per-day decay. Position sizing on PILL should anchor to the underlying notional of $11.66 per share and to the trader's directional view on PILL etf.
PILL collar setup
The PILL 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 PILL near $11.66, the first option leg uses a $12.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PILL chain at a 63-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 PILL shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $11.66 | long |
| Sell 1 | Call | $12.00 | $1.35 |
| Buy 1 | Put | $11.00 | $1.08 |
PILL collar risk and reward
- Net Premium / Debit
- -$1,138.50
- Max Profit (per contract)
- $61.50
- Max Loss (per contract)
- -$38.50
- Breakeven(s)
- $11.39
- Risk / Reward Ratio
- 1.597
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.
PILL collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on PILL. 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 | -99.9% | -$38.50 |
| $2.59 | -77.8% | -$38.50 |
| $5.16 | -55.7% | -$38.50 |
| $7.74 | -33.6% | -$38.50 |
| $10.32 | -11.5% | -$38.50 |
| $12.89 | +10.6% | +$61.50 |
| $15.47 | +32.7% | +$61.50 |
| $18.05 | +54.8% | +$61.50 |
| $20.63 | +76.9% | +$61.50 |
| $23.20 | +99.0% | +$61.50 |
When traders use collar on PILL
Collars on PILL hedge an existing long PILL 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.
PILL thesis for this collar
The market-implied 1-standard-deviation range for PILL extends from approximately $9.22 on the downside to $14.10 on the upside. A PILL collar hedges an existing long PILL 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 PILL IV rank near 11.32% 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 PILL at 73.00%. As a Financial Services name, PILL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PILL-specific events.
PILL 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. PILL positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PILL alongside the broader basket even when PILL-specific fundamentals are unchanged. Always rebuild the position from current PILL chain quotes before placing a trade.
Frequently asked questions
- What is a collar on PILL?
- A collar on PILL is the collar strategy applied to PILL (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 PILL etf trading near $11.66, the strikes shown on this page are snapped to the nearest listed PILL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are PILL 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 PILL collar priced from the end-of-day chain at a 30-day expiry (ATM IV 73.00%), the computed maximum profit is $61.50 per contract and the computed maximum loss is -$38.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PILL collar?
- The breakeven for the PILL collar priced on this page is roughly $11.39 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 PILL market-implied 1-standard-deviation expected move is approximately 20.93%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on PILL?
- Collars on PILL hedge an existing long PILL 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 PILL implied volatility affect this collar?
- PILL ATM IV is at 73.00% with IV rank near 11.32%, 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.