How are UDN 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 UDN collar priced from the end-of-day chain at a 30-day expiry (ATM IV 256.50%), the computed maximum profit is $111.00 per contract and the computed maximum loss is -$89.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a UDN collar?

The breakeven for the UDN collar priced on this page is roughly $17.89 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 UDN market-implied 1-standard-deviation expected move is approximately 73.54%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current UDN implied volatility affect this collar?

UDN ATM IV is at 256.50% with IV rank near 51.90%, 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.

UDN Collar Strategy

UDN (Invesco DB US Dollar Index Bearish Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.

The Invesco DB US Dollar Index Bearish Fund (UDN) is designed to provide investors with exposure to the inverse performance of the U.S. dollar against a basket of key global currencies. Specifically, it aims to track the Deutsche Bank Short USD Currency Portfolio Index – Excess Return, while also incorporating net interest income generated from its holdings, primarily U.S. Treasury securities and money market instruments, after accounting for fund expenses. This Fund offers a streamlined and economical method for investors seeking to benefit from a decline in the U.S. dollar's value relative to six major world currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. The underlying Index follows a rules-based approach, comprising exclusively "short" U.S. Dollar Index futures contracts, which are actively traded on the ICE futures exchange.

UDN (Invesco DB US Dollar Index Bearish Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $123.9M, a beta of 7.06 versus the broader market, a 52-week range of 17.75-19.11, average daily share volume of 133K, a public-listing history dating back to 2007. These structural characteristics shape how UDN etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 7.06 indicates UDN has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. UDN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on UDN?

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 UDN snapshot

As of June 29, 2026, spot at $17.88, ATM IV 256.50%, IV rank 51.90%, expected move 73.54%. The collar on UDN 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 18-day expiry.

Why this collar structure on UDN specifically: IV regime affects collar pricing on both sides; mid-range UDN IV at 256.50% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 73.54% (roughly $13.15 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated UDN expiries trade a higher absolute premium for lower per-day decay. Position sizing on UDN should anchor to the underlying notional of $17.88 per share and to the trader's directional view on UDN etf.

UDN collar setup

The UDN 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 UDN near $17.88, the first option leg uses a $19.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed UDN chain at a 18-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 UDN shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$17.88	long
Sell 1	Call	$19.00	$0.13
Buy 1	Put	$17.00	$0.14

UDN collar risk and reward

Net Premium / Debit: -$1,789.00
Max Profit (per contract): $111.00
Max Loss (per contract): -$89.00
Breakeven(s): $17.89
Risk / Reward Ratio: 1.247

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.

UDN collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on UDN. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-99.9%	-$89.00
$3.96	-77.8%	-$89.00
$7.91	-55.7%	-$89.00
$11.87	-33.6%	-$89.00
$15.82	-11.5%	-$89.00
$19.77	+10.6%	+$111.00
$23.72	+32.7%	+$111.00
$27.68	+54.8%	+$111.00
$31.63	+76.9%	+$111.00
$35.58	+99.0%	+$111.00

When traders use collar on UDN

Collars on UDN hedge an existing long UDN 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.

UDN thesis for this collar

The market-implied 1-standard-deviation range for UDN extends from approximately $4.73 on the downside to $31.03 on the upside. A UDN collar hedges an existing long UDN 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 UDN IV rank near 51.90% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on UDN should anchor more to the directional view and the expected-move geometry. As a Financial Services name, UDN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to UDN-specific events.

UDN 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. UDN positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move UDN alongside the broader basket even when UDN-specific fundamentals are unchanged. Always rebuild the position from current UDN chain quotes before placing a trade.

Frequently asked questions

What is a collar on UDN?: A collar on UDN is the collar strategy applied to UDN (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 UDN etf trading near $17.88, the strikes shown on this page are snapped to the nearest listed UDN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are UDN 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 UDN collar priced from the end-of-day chain at a 30-day expiry (ATM IV 256.50%), the computed maximum profit is $111.00 per contract and the computed maximum loss is -$89.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a UDN collar?: The breakeven for the UDN collar priced on this page is roughly $17.89 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 UDN market-implied 1-standard-deviation expected move is approximately 73.54%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on UDN?: Collars on UDN hedge an existing long UDN 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 UDN implied volatility affect this collar?: UDN ATM IV is at 256.50% with IV rank near 51.90%, 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.