CMC Collar Strategy
CMC (Commercial Metals Company), in the Basic Materials sector, (Steel industry), listed on NYSE.
Commercial Metals Company manufactures, recycles, and fabricates steel and metal products, and related materials and services in the United States, Poland, China, and internationally. The company processes and sells ferrous and nonferrous scrap metals to steel mills and foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary lead smelters, specialty steel mills, high temperature alloy manufacturers, and other consumers. It also manufactures and sells finished long steel products, including rebar, merchant bar, light structural, and other special sections, as well as semi-finished billets for re-rolling and forging applications. In addition, the company provides fabricated steel products used to reinforce concrete primarily in the construction of commercial and non-commercial buildings, hospitals, convention centers, industrial plants, power plants, highways, bridges, arenas, stadiums, and dams; sells and rents construction-related products and equipment to concrete installers and other businesses; and manufactures and sells strength bars for the truck trailer industry, special bar steels for the energy market, and armor plates for military vehicles. Further, it manufactures rebars, merchant bars, and wire rods; and sells fabricated rebars, wire meshes, fabricated meshes, assembled rebar cages, and other fabricated rebar by-products to fabricators, manufacturers, distributors, and construction companies. The company was founded in 1915 and is headquartered in Irving, Texas.
CMC (Commercial Metals Company) trades in the Basic Materials sector, specifically Steel, with a market capitalization of approximately $7.80B, a trailing P/E of 15.45, a beta of 1.49 versus the broader market, a 52-week range of 45.5-84.87, average daily share volume of 1.2M, a public-listing history dating back to 1980, approximately 13K full-time employees. These structural characteristics shape how CMC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.49 indicates CMC has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. CMC pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on CMC?
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 CMC snapshot
As of May 15, 2026, spot at $71.53, ATM IV 43.00%, IV rank 19.82%, expected move 12.33%. The collar on CMC 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 34-day expiry.
Why this collar structure on CMC specifically: IV regime affects collar pricing on both sides; compressed CMC IV at 43.00% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 12.33% (roughly $8.82 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated CMC expiries trade a higher absolute premium for lower per-day decay. Position sizing on CMC should anchor to the underlying notional of $71.53 per share and to the trader's directional view on CMC stock.
CMC collar setup
The CMC 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 CMC near $71.53, the first option leg uses a $75.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CMC chain at a 34-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 CMC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $71.53 | long |
| Sell 1 | Call | $75.00 | $2.15 |
| Buy 1 | Put | $67.50 | $2.25 |
CMC collar risk and reward
- Net Premium / Debit
- -$7,163.00
- Max Profit (per contract)
- $337.00
- Max Loss (per contract)
- -$413.00
- Breakeven(s)
- $71.63
- Risk / Reward Ratio
- 0.816
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.
CMC collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on CMC. 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% | -$413.00 |
| $15.82 | -77.9% | -$413.00 |
| $31.64 | -55.8% | -$413.00 |
| $47.45 | -33.7% | -$413.00 |
| $63.27 | -11.5% | -$413.00 |
| $79.08 | +10.6% | +$337.00 |
| $94.90 | +32.7% | +$337.00 |
| $110.71 | +54.8% | +$337.00 |
| $126.53 | +76.9% | +$337.00 |
| $142.34 | +99.0% | +$337.00 |
When traders use collar on CMC
Collars on CMC hedge an existing long CMC 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.
CMC thesis for this collar
The market-implied 1-standard-deviation range for CMC extends from approximately $62.71 on the downside to $80.35 on the upside. A CMC collar hedges an existing long CMC 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 CMC IV rank near 19.82% 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 CMC at 43.00%. As a Basic Materials name, CMC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CMC-specific events.
CMC 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. CMC positions also carry Basic Materials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CMC alongside the broader basket even when CMC-specific fundamentals are unchanged. Always rebuild the position from current CMC chain quotes before placing a trade.
Frequently asked questions
- What is a collar on CMC?
- A collar on CMC is the collar strategy applied to CMC (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 CMC stock trading near $71.53, the strikes shown on this page are snapped to the nearest listed CMC chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CMC 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 CMC collar priced from the end-of-day chain at a 30-day expiry (ATM IV 43.00%), the computed maximum profit is $337.00 per contract and the computed maximum loss is -$413.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CMC collar?
- The breakeven for the CMC collar priced on this page is roughly $71.63 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 CMC market-implied 1-standard-deviation expected move is approximately 12.33%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on CMC?
- Collars on CMC hedge an existing long CMC 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 CMC implied volatility affect this collar?
- CMC ATM IV is at 43.00% with IV rank near 19.82%, 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.