How are ARR 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 ARR collar priced from the end-of-day chain at a 30-day expiry (ATM IV 23.50%), the computed maximum profit is $19.00 per contract and the computed maximum loss is -$181.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ARR collar?

The breakeven for the ARR collar priced on this page is roughly $17.81 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 ARR market-implied 1-standard-deviation expected move is approximately 6.74%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ARR implied volatility affect this collar?

ARR ATM IV is at 23.50% with IV rank near 2.71%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.

ARR Collar Strategy

ARR (ARMOUR Residential REIT, Inc.), in the Real Estate sector, (REIT - Mortgage industry), listed on NYSE.

ARMOUR Residential REIT, Inc. invests in residential mortgage-backed securities (MBS) in the United States. The company's securities portfolio primarily consists of the United States Government-sponsored entity's (GSE) and the Government National Mortgage Administration's issued or guaranteed securities backed by fixed rate, hybrid adjustable rate, and adjustable-rate home loans, as well as unsecured notes and bonds issued by the GSE and the United States treasuries, as well as money market instruments. It also invests in other securities backed by residential mortgages for which the payment of principal and interest is not guaranteed by a GSE or government agency. The company has elected to be taxed as a real estate investment trust under the Internal Revenue Code. As a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ARMOUR Residential REIT, Inc. was incorporated in 2008 and is based in Vero Beach, Florida.

ARR (ARMOUR Residential REIT, Inc.) trades in the Real Estate sector, specifically REIT - Mortgage, with a market capitalization of approximately $2.16B, a trailing P/E of 8.65, a beta of 1.37 versus the broader market, a 52-week range of 13.98-19.31, average daily share volume of 3.2M, a public-listing history dating back to 2007. These structural characteristics shape how ARR stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.37 indicates ARR has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 8.65 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. ARR pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on ARR?

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 ARR snapshot

As of May 15, 2026, spot at $16.96, ATM IV 23.50%, IV rank 2.71%, expected move 6.74%. The collar on ARR 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 245-day expiry.

Why this collar structure on ARR specifically: IV regime affects collar pricing on both sides; compressed ARR IV at 23.50% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.74% (roughly $1.14 on the underlying). The 245-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ARR expiries trade a higher absolute premium for lower per-day decay. Position sizing on ARR should anchor to the underlying notional of $16.96 per share and to the trader's directional view on ARR stock.

ARR collar setup

The ARR 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 ARR near $16.96, the first option leg uses a $18.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ARR chain at a 245-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 ARR shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$16.96	long
Sell 1	Call	$18.00	$0.58
Buy 1	Put	$16.00	$1.43

ARR collar risk and reward

Net Premium / Debit: -$1,781.00
Max Profit (per contract): $19.00
Max Loss (per contract): -$181.00
Breakeven(s): $17.81
Risk / Reward Ratio: 0.105

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.

ARR collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on ARR. 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%	-$181.00
$3.76	-77.8%	-$181.00
$7.51	-55.7%	-$181.00
$11.26	-33.6%	-$181.00
$15.01	-11.5%	-$181.00
$18.75	+10.6%	+$19.00
$22.50	+32.7%	+$19.00
$26.25	+54.8%	+$19.00
$30.00	+76.9%	+$19.00
$33.75	+99.0%	+$19.00

When traders use collar on ARR

Collars on ARR hedge an existing long ARR 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.

ARR thesis for this collar

The market-implied 1-standard-deviation range for ARR extends from approximately $15.82 on the downside to $18.10 on the upside. A ARR collar hedges an existing long ARR 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 ARR IV rank near 2.71% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on ARR at 23.50%. As a Real Estate name, ARR options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ARR-specific events.

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

Frequently asked questions

What is a collar on ARR?: A collar on ARR is the collar strategy applied to ARR (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 ARR stock trading near $16.96, the strikes shown on this page are snapped to the nearest listed ARR chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ARR 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 ARR collar priced from the end-of-day chain at a 30-day expiry (ATM IV 23.50%), the computed maximum profit is $19.00 per contract and the computed maximum loss is -$181.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ARR collar?: The breakeven for the ARR collar priced on this page is roughly $17.81 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 ARR market-implied 1-standard-deviation expected move is approximately 6.74%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on ARR?: Collars on ARR hedge an existing long ARR 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 ARR implied volatility affect this collar?: ARR ATM IV is at 23.50% with IV rank near 2.71%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.