ALGM Collar Strategy
ALGM (Allegro MicroSystems, Inc.), in the Technology sector, (Semiconductors industry), listed on NASDAQ.
Allegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.
ALGM (Allegro MicroSystems, Inc.) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $8.52B, a beta of 2.02 versus the broader market, a 52-week range of 22.41-51.4, average daily share volume of 2.2M, a public-listing history dating back to 2020, approximately 5K full-time employees. These structural characteristics shape how ALGM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.02 indicates ALGM has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a collar on ALGM?
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 ALGM snapshot
As of May 15, 2026, spot at $43.30, ATM IV 70.70%, IV rank 51.28%, expected move 20.27%. The collar on ALGM 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 98-day expiry.
Why this collar structure on ALGM specifically: IV regime affects collar pricing on both sides; mid-range ALGM IV at 70.70% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 20.27% (roughly $8.78 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ALGM expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALGM should anchor to the underlying notional of $43.30 per share and to the trader's directional view on ALGM stock.
ALGM collar setup
The ALGM 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 ALGM near $43.30, the first option leg uses a $45.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALGM chain at a 98-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 ALGM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $43.30 | long |
| Sell 1 | Call | $45.00 | $5.70 |
| Buy 1 | Put | $40.00 | $4.50 |
ALGM collar risk and reward
- Net Premium / Debit
- -$4,210.00
- Max Profit (per contract)
- $290.00
- Max Loss (per contract)
- -$210.00
- Breakeven(s)
- $42.10
- Risk / Reward Ratio
- 1.381
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.
ALGM collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on ALGM. 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% | -$210.00 |
| $9.58 | -77.9% | -$210.00 |
| $19.16 | -55.8% | -$210.00 |
| $28.73 | -33.7% | -$210.00 |
| $38.30 | -11.5% | -$210.00 |
| $47.87 | +10.6% | +$290.00 |
| $57.45 | +32.7% | +$290.00 |
| $67.02 | +54.8% | +$290.00 |
| $76.59 | +76.9% | +$290.00 |
| $86.16 | +99.0% | +$290.00 |
When traders use collar on ALGM
Collars on ALGM hedge an existing long ALGM 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.
ALGM thesis for this collar
The market-implied 1-standard-deviation range for ALGM extends from approximately $34.52 on the downside to $52.08 on the upside. A ALGM collar hedges an existing long ALGM 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 ALGM IV rank near 51.28% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on ALGM should anchor more to the directional view and the expected-move geometry. As a Technology name, ALGM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALGM-specific events.
ALGM 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. ALGM positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALGM alongside the broader basket even when ALGM-specific fundamentals are unchanged. Always rebuild the position from current ALGM chain quotes before placing a trade.
Frequently asked questions
- What is a collar on ALGM?
- A collar on ALGM is the collar strategy applied to ALGM (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 ALGM stock trading near $43.30, the strikes shown on this page are snapped to the nearest listed ALGM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALGM 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 ALGM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 70.70%), the computed maximum profit is $290.00 per contract and the computed maximum loss is -$210.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALGM collar?
- The breakeven for the ALGM collar priced on this page is roughly $42.10 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 ALGM market-implied 1-standard-deviation expected move is approximately 20.27%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on ALGM?
- Collars on ALGM hedge an existing long ALGM 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 ALGM implied volatility affect this collar?
- ALGM ATM IV is at 70.70% with IV rank near 51.28%, 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.