SCO Collar Strategy
SCO (ProShares - UltraShort Bloomberg Crude Oil), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
ProShares UltraShort Bloomberg Crude Oil seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index.
SCO (ProShares - UltraShort Bloomberg Crude Oil) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $57.0M, a beta of -2.43 versus the broader market, a 52-week range of 6.06-21.47, average daily share volume of 42.6M, a public-listing history dating back to 2008. These structural characteristics shape how SCO etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of -2.43 indicates SCO has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a collar on SCO?
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 SCO snapshot
As of May 15, 2026, spot at $6.05, ATM IV 93.84%, IV rank 37.19%, expected move 26.90%. The collar on SCO 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 SCO specifically: IV regime affects collar pricing on both sides; mid-range SCO IV at 93.84% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 26.90% (roughly $1.63 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 SCO expiries trade a higher absolute premium for lower per-day decay. Position sizing on SCO should anchor to the underlying notional of $6.05 per share and to the trader's directional view on SCO etf.
SCO collar setup
The SCO 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 SCO near $6.05, the first option leg uses a $6.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SCO 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 SCO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $6.05 | long |
| Sell 1 | Call | $6.50 | $0.45 |
| Buy 1 | Put | $5.50 | $0.40 |
SCO collar risk and reward
- Net Premium / Debit
- -$600.00
- Max Profit (per contract)
- $50.00
- Max Loss (per contract)
- -$50.00
- Breakeven(s)
- $6.00
- Risk / Reward Ratio
- 1.000
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.
SCO collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on SCO. 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 | -99.8% | -$50.00 |
| $1.35 | -77.7% | -$50.00 |
| $2.68 | -55.7% | -$50.00 |
| $4.02 | -33.6% | -$50.00 |
| $5.36 | -11.5% | -$50.00 |
| $6.69 | +10.6% | +$50.00 |
| $8.03 | +32.7% | +$50.00 |
| $9.37 | +54.8% | +$50.00 |
| $10.70 | +76.9% | +$50.00 |
| $12.04 | +99.0% | +$50.00 |
When traders use collar on SCO
Collars on SCO hedge an existing long SCO 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.
SCO thesis for this collar
The market-implied 1-standard-deviation range for SCO extends from approximately $4.42 on the downside to $7.68 on the upside. A SCO collar hedges an existing long SCO 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 SCO IV rank near 37.19% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on SCO should anchor more to the directional view and the expected-move geometry. As a Financial Services name, SCO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SCO-specific events.
SCO 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. SCO positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SCO alongside the broader basket even when SCO-specific fundamentals are unchanged. Always rebuild the position from current SCO chain quotes before placing a trade.
Frequently asked questions
- What is a collar on SCO?
- A collar on SCO is the collar strategy applied to SCO (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 SCO etf trading near $6.05, the strikes shown on this page are snapped to the nearest listed SCO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SCO 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 SCO collar priced from the end-of-day chain at a 30-day expiry (ATM IV 93.84%), the computed maximum profit is $50.00 per contract and the computed maximum loss is -$50.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a SCO collar?
- The breakeven for the SCO collar priced on this page is roughly $6.00 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 SCO market-implied 1-standard-deviation expected move is approximately 26.90%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on SCO?
- Collars on SCO hedge an existing long SCO 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 SCO implied volatility affect this collar?
- SCO ATM IV is at 93.84% with IV rank near 37.19%, 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.