How are KMX 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 KMX collar priced from the end-of-day chain at a 30-day expiry (ATM IV 41.10%), the computed maximum profit is $259.50 per contract and the computed maximum loss is -$240.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a KMX collar?

The breakeven for the KMX collar priced on this page is roughly $52.41 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 KMX market-implied 1-standard-deviation expected move is approximately 11.78%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current KMX implied volatility affect this collar?

KMX ATM IV is at 41.10% with IV rank near 16.80%, 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.

KMX Collar Strategy

KMX (CarMax, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NYSE.

CarMax, Inc., together with its associated entities, functions as a prominent purveyor of previously owned automobiles across the United States. Its business operations are strategically structured into two principal divisions: CarMax Sales Operations and CarMax Auto Finance. Through its retail offerings, the company provides an extensive selection of pre-owned vehicles, including various domestic, imported, and luxury models, in addition to hybrid and electric options. Customers also have the opportunity to purchase extended protection plans at the time of their vehicle acquisition. Separately, CarMax sells older, higher-mileage vehicles—typically around ten years old with over 100,000 miles—via wholesale auctions. Furthermore, CarMax delivers reconditioning and repair services for its vehicles.

KMX (CarMax, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $7.49B, a trailing P/E of 33.63, a beta of 1.20 versus the broader market, a 52-week range of 30.26-71.99, average daily share volume of 3.6M, a public-listing history dating back to 1997, approximately 30K full-time employees. These structural characteristics shape how KMX stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.20 places KMX roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a collar on KMX?

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 KMX snapshot

As of June 30, 2026, spot at $52.48, ATM IV 41.10%, IV rank 16.80%, expected move 11.78%. The collar on KMX 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 17-day expiry.

Why this collar structure on KMX specifically: IV regime affects collar pricing on both sides; compressed KMX IV at 41.10% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 11.78% (roughly $6.18 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KMX expiries trade a higher absolute premium for lower per-day decay. Position sizing on KMX should anchor to the underlying notional of $52.48 per share and to the trader's directional view on KMX stock.

KMX collar setup

The KMX 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 KMX near $52.48, the first option leg uses a $55.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KMX chain at a 17-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 KMX shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$52.48	long
Sell 1	Call	$55.00	$0.95
Buy 1	Put	$50.00	$0.88

KMX collar risk and reward

Net Premium / Debit: -$5,240.50
Max Profit (per contract): $259.50
Max Loss (per contract): -$240.50
Breakeven(s): $52.41
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.

KMX collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on KMX. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$240.50
$11.61	-77.9%	-$240.50
$23.22	-55.8%	-$240.50
$34.82	-33.7%	-$240.50
$46.42	-11.5%	-$240.50
$58.02	+10.6%	+$259.50
$69.63	+32.7%	+$259.50
$81.23	+54.8%	+$259.50
$92.83	+76.9%	+$259.50
$104.43	+99.0%	+$259.50

When traders use collar on KMX

Collars on KMX hedge an existing long KMX 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.

KMX thesis for this collar

The market-implied 1-standard-deviation range for KMX extends from approximately $46.30 on the downside to $58.66 on the upside. A KMX collar hedges an existing long KMX 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 KMX IV rank near 16.80% 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 KMX at 41.10%. As a Consumer Cyclical name, KMX options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KMX-specific events.

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

Frequently asked questions

What is a collar on KMX?: A collar on KMX is the collar strategy applied to KMX (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 KMX stock trading near $52.48, the strikes shown on this page are snapped to the nearest listed KMX chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are KMX 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 KMX collar priced from the end-of-day chain at a 30-day expiry (ATM IV 41.10%), the computed maximum profit is $259.50 per contract and the computed maximum loss is -$240.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a KMX collar?: The breakeven for the KMX collar priced on this page is roughly $52.41 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 KMX market-implied 1-standard-deviation expected move is approximately 11.78%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on KMX?: Collars on KMX hedge an existing long KMX 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 KMX implied volatility affect this collar?: KMX ATM IV is at 41.10% with IV rank near 16.80%, 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.