DNOW Collar Strategy
DNOW (Dnow Inc.), in the Energy sector, (Oil & Gas Equipment & Services industry), listed on NYSE.
Dnow Inc. distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and industrial manufacturing operations in the United States, Canada, and internationally. The company offers its products under the DistributionNOW and DNOW brand names. It provides consumable maintenance, repair, and operating supplies; pipes, valves, fittings, flanges, gaskets, fasteners, electrical products, instrumentations, artificial lift, pumping solutions, valve actuation and modular process, and measurement and control equipment; and mill supplies, tools, safety supplies, and personal protective equipment, as well as applied products and applications, such as artificial lift systems, coatings, and miscellaneous expendable items. The company also offers original equipment manufacturer equipment, including pumps, generator sets, air and gas compressors, dryers, blowers, mixers, and valves; modular oil and gas tank battery solutions; and application systems, work processes, parts integration, optimization solutions, and after-sales support services. In addition, it provides supply chain and materials management solutions that include procurement, inventory planning and management, and warehouse management, as well as solutions for logistics, point-of-issue technology, project management, business process, and performance metrics reporting services. The company serves customers through a network of approximately 180 locations in the upstream, midstream, and downstream sectors of the energy industry, including drilling contractors, well-servicing companies, independent and national oil and gas companies, midstream operators, and refineries, as well as petrochemical, chemical, utilities, and other downstream energy processors; and industrial and manufacturing companies.
DNOW (Dnow Inc.) trades in the Energy sector, specifically Oil & Gas Equipment & Services, with a market capitalization of approximately $1.55B, a beta of 0.86 versus the broader market, a 52-week range of 10.935-17.26, average daily share volume of 3.7M, a public-listing history dating back to 2014, approximately 3K full-time employees. These structural characteristics shape how DNOW stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.86 places DNOW roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a collar on DNOW?
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 DNOW snapshot
As of May 15, 2026, spot at $13.21, ATM IV 42.80%, IV rank 8.04%, expected move 12.27%. The collar on DNOW 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 DNOW specifically: IV regime affects collar pricing on both sides; compressed DNOW IV at 42.80% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 12.27% (roughly $1.62 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 DNOW expiries trade a higher absolute premium for lower per-day decay. Position sizing on DNOW should anchor to the underlying notional of $13.21 per share and to the trader's directional view on DNOW stock.
DNOW collar setup
The DNOW 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 DNOW near $13.21, the first option leg uses a $13.87 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DNOW 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 DNOW shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $13.21 | long |
| Sell 1 | Call | $13.87 | N/A |
| Buy 1 | Put | $12.55 | N/A |
DNOW collar risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
DNOW collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on DNOW. 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.
When traders use collar on DNOW
Collars on DNOW hedge an existing long DNOW 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.
DNOW thesis for this collar
The market-implied 1-standard-deviation range for DNOW extends from approximately $11.59 on the downside to $14.83 on the upside. A DNOW collar hedges an existing long DNOW 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 DNOW IV rank near 8.04% 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 DNOW at 42.80%. As a Energy name, DNOW options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DNOW-specific events.
DNOW 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. DNOW positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DNOW alongside the broader basket even when DNOW-specific fundamentals are unchanged. Always rebuild the position from current DNOW chain quotes before placing a trade.
Frequently asked questions
- What is a collar on DNOW?
- A collar on DNOW is the collar strategy applied to DNOW (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 DNOW stock trading near $13.21, the strikes shown on this page are snapped to the nearest listed DNOW chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DNOW 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 DNOW collar priced from the end-of-day chain at a 30-day expiry (ATM IV 42.80%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DNOW collar?
- The breakeven for the DNOW collar priced on this page is no defined breakeven on the modeled curve 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 DNOW market-implied 1-standard-deviation expected move is approximately 12.27%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on DNOW?
- Collars on DNOW hedge an existing long DNOW 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 DNOW implied volatility affect this collar?
- DNOW ATM IV is at 42.80% with IV rank near 8.04%, 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.