AI Collar Strategy
AI (C3.ai, Inc.), in the Technology sector, (Information Technology Services industry), listed on NYSE.
C3.ai, Inc. is a leading provider of enterprise artificial intelligence (AI) software solutions, serving a global clientele across North America, Europe, the Middle East, Africa, and the Asia Pacific region. Its core offerings include the C3 AI Application Platform, a robust environment for developing, deploying, and operating enterprise-scale AI applications. Complementing this platform are specialized tools such as C3 AI Ex Machina for preparing data for analysis, C3 AI CRM which is tailored for specific industry customer relationship management needs, and C3 AI Data Vision for insightful visualization and understanding of complex data relationships. Furthermore, C3.ai delivers a comprehensive portfolio of pre-built, industry-specific AI applications designed to tackle critical business challenges. These include solutions for optimizing inventory levels (C3 AI Inventory Optimization), mitigating supply chain disruptions (C3 AI Supply Network Risk), proactively managing customer attrition (C3 AI Customer Churn Management), streamlining production schedules (C3 AI Production Schedule Optimization), forecasting equipment failures (C3 AI Predictive Maintenance), identifying financial irregularities (C3 AI Fraud Detection), and optimizing energy consumption (C3 AI Energy Management). These integrated, turnkey AI applications cater to a wide array of market segments, including oil and gas, chemicals, utilities, manufacturing, financial services, defense, intelligence, aerospace, healthcare, and telecommunications.
AI (C3.ai, Inc.) trades in the Technology sector, specifically Information Technology Services, with a market capitalization of approximately $1.53B, a beta of 2.07 versus the broader market, a 52-week range of 7.675-20.22, average daily share volume of 5.7M, a public-listing history dating back to 2020, approximately 764 full-time employees. These structural characteristics shape how AI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.07 indicates AI has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. AI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on AI?
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.
AI snapshot
As of August 14, 2026, spot at $9.90, ATM IV 79.25%, IV rank 52.76%, expected move 22.72%. The collar on AI below is built from the August 14, 2026 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 AI specifically: IV regime affects collar pricing on both sides; mid-range AI IV at 79.25% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 22.72% (roughly $2.25 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 AI expiries trade a higher absolute premium for lower per-day decay. Position sizing on AI should anchor to the underlying notional of $9.90 per share and to the trader's directional view on AI stock.
AI collar setup
The AI collar below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With AI at $9.90 on that close, the first option leg uses a $10.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AI 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 AI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $9.90 | long |
| Sell 1 | Call | $10.50 | $0.63 |
| Buy 1 | Put | $9.50 | $0.70 |
AI collar risk and reward
- Net Premium / Debit
- -$997.00
- Max Profit (per contract)
- $53.00
- Max Loss (per contract)
- -$47.00
- Breakeven(s)
- $9.97
- Risk / Reward Ratio
- 1.128
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.
AI collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on AI. 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% | -$47.00 |
| $2.20 | -77.8% | -$47.00 |
| $4.39 | -55.7% | -$47.00 |
| $6.57 | -33.6% | -$47.00 |
| $8.76 | -11.5% | -$47.00 |
| $10.95 | +10.6% | +$53.00 |
| $13.14 | +32.7% | +$53.00 |
| $15.32 | +54.8% | +$53.00 |
| $17.51 | +76.9% | +$53.00 |
| $19.70 | +99.0% | +$53.00 |
When traders use collar on AI
Collars on AI hedge an existing long AI 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.
AI thesis for this collar
The market-implied 1-standard-deviation range for AI extends from approximately $7.65 on the downside to $12.15 on the upside. A AI collar hedges an existing long AI 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 AI IV rank near 52.76% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on AI should anchor more to the directional view and the expected-move geometry. As a Technology name, AI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AI-specific events.
AI 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. AI positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AI alongside the broader basket even when AI-specific fundamentals are unchanged. Always rebuild the position from current AI chain quotes before placing a trade.
Frequently asked questions
- What is a collar on AI?
- A collar on AI is the collar strategy applied to AI (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 AI stock at $9.90 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed AI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are AI 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 AI collar priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 79.25%), the computed maximum profit is $53.00 per contract and the computed maximum loss is -$47.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AI collar?
- The breakeven for the AI collar priced on this page is roughly $9.97 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The AI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 22.72%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on AI?
- Collars on AI hedge an existing long AI 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 AI implied volatility affect this collar?
- AI ATM IV is at 79.25% with IV rank near 52.76%, 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.