How are ITW 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 ITW collar priced from the end-of-day chain at a 30-day expiry (ATM IV 21.30%), the computed maximum profit is $1,038.00 per contract and the computed maximum loss is -$962.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ITW collar?

The breakeven for the ITW collar priced on this page is roughly $249.62 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 ITW market-implied 1-standard-deviation expected move is approximately 6.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ITW implied volatility affect this collar?

ITW ATM IV is at 21.30% with IV rank near 35.94%, 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.

ITW Collar Strategy

ITW (Illinois Tool Works Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.

Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses. The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services. The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics. The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories.

ITW (Illinois Tool Works Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $71.95B, a trailing P/E of 23.01, a beta of 1.06 versus the broader market, a 52-week range of 238.82-303.16, average daily share volume of 1.4M, a public-listing history dating back to 1973, approximately 44K full-time employees. These structural characteristics shape how ITW stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.06 places ITW roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ITW pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on ITW?

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 ITW snapshot

As of May 15, 2026, spot at $248.82, ATM IV 21.30%, IV rank 35.94%, expected move 6.11%. The collar on ITW 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 ITW specifically: IV regime affects collar pricing on both sides; mid-range ITW IV at 21.30% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.11% (roughly $15.19 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 ITW expiries trade a higher absolute premium for lower per-day decay. Position sizing on ITW should anchor to the underlying notional of $248.82 per share and to the trader's directional view on ITW stock.

ITW collar setup

The ITW 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 ITW near $248.82, the first option leg uses a $260.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ITW 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 ITW shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$248.82	long
Sell 1	Call	$260.00	$2.45
Buy 1	Put	$240.00	$3.25

ITW collar risk and reward

Net Premium / Debit: -$24,962.00
Max Profit (per contract): $1,038.00
Max Loss (per contract): -$962.00
Breakeven(s): $249.62
Risk / Reward Ratio: 1.079

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.

ITW collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on ITW. 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%	-$962.00
$55.02	-77.9%	-$962.00
$110.04	-55.8%	-$962.00
$165.05	-33.7%	-$962.00
$220.07	-11.6%	-$962.00
$275.08	+10.6%	+$1,038.00
$330.10	+32.7%	+$1,038.00
$385.11	+54.8%	+$1,038.00
$440.12	+76.9%	+$1,038.00
$495.14	+99.0%	+$1,038.00

When traders use collar on ITW

Collars on ITW hedge an existing long ITW 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.

ITW thesis for this collar

The market-implied 1-standard-deviation range for ITW extends from approximately $233.63 on the downside to $264.01 on the upside. A ITW collar hedges an existing long ITW 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 ITW IV rank near 35.94% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on ITW should anchor more to the directional view and the expected-move geometry. As a Industrials name, ITW options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ITW-specific events.

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

Frequently asked questions

What is a collar on ITW?: A collar on ITW is the collar strategy applied to ITW (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 ITW stock trading near $248.82, the strikes shown on this page are snapped to the nearest listed ITW chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ITW 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 ITW collar priced from the end-of-day chain at a 30-day expiry (ATM IV 21.30%), the computed maximum profit is $1,038.00 per contract and the computed maximum loss is -$962.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ITW collar?: The breakeven for the ITW collar priced on this page is roughly $249.62 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 ITW market-implied 1-standard-deviation expected move is approximately 6.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on ITW?: Collars on ITW hedge an existing long ITW 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 ITW implied volatility affect this collar?: ITW ATM IV is at 21.30% with IV rank near 35.94%, 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.