ADP Collar Strategy
ADP (Automatic Data Processing, Inc.), in the Industrials sector, (Staffing & Employment Services industry), listed on NASDAQ.
Automatic Data Processing, Inc. provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). The Employer Services segment offers strategic, cloud-based platforms, and human resources (HR) outsourcing solutions. Its offerings include payroll, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. The PEO Services segment provides HR outsourcing solutions to small and mid-sized businesses through a co-employment model. This segment offers benefits package, protection and compliance, talent engagement, expertise, comprehensive outsourcing, and recruitment process outsourcing services.
ADP (Automatic Data Processing, Inc.) trades in the Industrials sector, specifically Staffing & Employment Services, with a market capitalization of approximately $83.40B, a trailing P/E of 19.26, a beta of 0.84 versus the broader market, a 52-week range of 188.16-329.93, average daily share volume of 3.6M, a public-listing history dating back to 1980, approximately 64K full-time employees. These structural characteristics shape how ADP stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.84 places ADP roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ADP pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on ADP?
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 ADP snapshot
As of May 15, 2026, spot at $214.36, ATM IV 30.15%, IV rank 66.84%, expected move 8.64%. The collar on ADP 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 ADP specifically: IV regime affects collar pricing on both sides; mid-range ADP IV at 30.15% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 8.64% (roughly $18.53 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 ADP expiries trade a higher absolute premium for lower per-day decay. Position sizing on ADP should anchor to the underlying notional of $214.36 per share and to the trader's directional view on ADP stock.
ADP collar setup
The ADP 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 ADP near $214.36, the first option leg uses a $225.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ADP 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 ADP shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $214.36 | long |
| Sell 1 | Call | $225.00 | $2.93 |
| Buy 1 | Put | $205.00 | $3.85 |
ADP collar risk and reward
- Net Premium / Debit
- -$21,528.50
- Max Profit (per contract)
- $971.50
- Max Loss (per contract)
- -$1,028.50
- Breakeven(s)
- $215.29
- Risk / Reward Ratio
- 0.945
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.
ADP collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on ADP. 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% | -$1,028.50 |
| $47.41 | -77.9% | -$1,028.50 |
| $94.80 | -55.8% | -$1,028.50 |
| $142.20 | -33.7% | -$1,028.50 |
| $189.59 | -11.6% | -$1,028.50 |
| $236.99 | +10.6% | +$971.50 |
| $284.38 | +32.7% | +$971.50 |
| $331.78 | +54.8% | +$971.50 |
| $379.17 | +76.9% | +$971.50 |
| $426.57 | +99.0% | +$971.50 |
When traders use collar on ADP
Collars on ADP hedge an existing long ADP stock 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.
ADP thesis for this collar
The market-implied 1-standard-deviation range for ADP extends from approximately $195.83 on the downside to $232.89 on the upside. A ADP collar hedges an existing long ADP 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 ADP IV rank near 66.84% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on ADP should anchor more to the directional view and the expected-move geometry. As a Industrials name, ADP options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ADP-specific events.
ADP 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. ADP positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ADP alongside the broader basket even when ADP-specific fundamentals are unchanged. Always rebuild the position from current ADP chain quotes before placing a trade.
Frequently asked questions
- What is a collar on ADP?
- A collar on ADP is the collar strategy applied to ADP (stock). 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 ADP stock trading near $214.36, the strikes shown on this page are snapped to the nearest listed ADP chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ADP 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 ADP collar priced from the end-of-day chain at a 30-day expiry (ATM IV 30.15%), the computed maximum profit is $971.50 per contract and the computed maximum loss is -$1,028.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ADP collar?
- The breakeven for the ADP collar priced on this page is roughly $215.29 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 ADP market-implied 1-standard-deviation expected move is approximately 8.64%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on ADP?
- Collars on ADP hedge an existing long ADP stock 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 ADP implied volatility affect this collar?
- ADP ATM IV is at 30.15% with IV rank near 66.84%, 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.