How are HESM 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 HESM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 22.70%), the computed maximum profit is $174.50 per contract and the computed maximum loss is -$225.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a HESM collar?

The breakeven for the HESM collar priced on this page is roughly $40.26 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 HESM market-implied 1-standard-deviation expected move is approximately 6.51%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current HESM implied volatility affect this collar?

HESM ATM IV is at 22.70% with IV rank near 46.63%, 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.

HESM Collar Strategy

HESM (Hess Midstream LP), in the Energy sector, (Oil & Gas Midstream industry), listed on NYSE.

Hess Midstream LP owns, develops, operates, and acquires midstream assets. The company operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day; and crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson's Corner Header System, a crude oil pipeline header system.

HESM (Hess Midstream LP) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $8.05B, a trailing P/E of 13.60, a beta of 0.52 versus the broader market, a 52-week range of 31.63-44.14, average daily share volume of 1.9M, a public-listing history dating back to 2017, approximately 176 full-time employees. These structural characteristics shape how HESM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.52 indicates HESM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. HESM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on HESM?

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 HESM snapshot

As of May 15, 2026, spot at $39.83, ATM IV 22.70%, IV rank 46.63%, expected move 6.51%. The collar on HESM 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 HESM specifically: IV regime affects collar pricing on both sides; mid-range HESM IV at 22.70% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.51% (roughly $2.59 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 HESM expiries trade a higher absolute premium for lower per-day decay. Position sizing on HESM should anchor to the underlying notional of $39.83 per share and to the trader's directional view on HESM stock.

HESM collar setup

The HESM 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 HESM near $39.83, the first option leg uses a $42.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HESM 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 HESM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$39.83	long
Sell 1	Call	$42.00	$0.80
Buy 1	Put	$38.00	$1.23

HESM collar risk and reward

Net Premium / Debit: -$4,025.50
Max Profit (per contract): $174.50
Max Loss (per contract): -$225.50
Breakeven(s): $40.26
Risk / Reward Ratio: 0.774

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.

HESM collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on HESM. 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%	-$225.50
$8.82	-77.9%	-$225.50
$17.62	-55.8%	-$225.50
$26.43	-33.7%	-$225.50
$35.23	-11.5%	-$225.50
$44.04	+10.6%	+$174.50
$52.84	+32.7%	+$174.50
$61.65	+54.8%	+$174.50
$70.45	+76.9%	+$174.50
$79.26	+99.0%	+$174.50

When traders use collar on HESM

Collars on HESM hedge an existing long HESM 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.

HESM thesis for this collar

The market-implied 1-standard-deviation range for HESM extends from approximately $37.24 on the downside to $42.42 on the upside. A HESM collar hedges an existing long HESM 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 HESM IV rank near 46.63% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on HESM should anchor more to the directional view and the expected-move geometry. As a Energy name, HESM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HESM-specific events.

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

Frequently asked questions

What is a collar on HESM?: A collar on HESM is the collar strategy applied to HESM (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 HESM stock trading near $39.83, the strikes shown on this page are snapped to the nearest listed HESM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are HESM 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 HESM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 22.70%), the computed maximum profit is $174.50 per contract and the computed maximum loss is -$225.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a HESM collar?: The breakeven for the HESM collar priced on this page is roughly $40.26 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 HESM market-implied 1-standard-deviation expected move is approximately 6.51%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on HESM?: Collars on HESM hedge an existing long HESM 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 HESM implied volatility affect this collar?: HESM ATM IV is at 22.70% with IV rank near 46.63%, 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.