KTOS Collar Strategy
KTOS (Kratos Defense & Security Solutions, Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NASDAQ.
Kratos Defense & Security Solutions, Inc. operates as a government contractor of the U.S. Department of Defense. The company operates through two segments, Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment offers microwave electronic products, space and satellite communications, training and cybersecurity/ warfare, C5ISR/ modular systems, turbine technologies, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. It serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers.
KTOS (Kratos Defense & Security Solutions, Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $9.84B, a trailing P/E of 315.65, a beta of 1.06 versus the broader market, a 52-week range of 33.56-134, average daily share volume of 4.4M, a public-listing history dating back to 1999, approximately 4K full-time employees. These structural characteristics shape how KTOS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.06 places KTOS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 315.65 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple.
What is a collar on KTOS?
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 KTOS snapshot
As of May 13, 2026, spot at $53.16, ATM IV 69.00%, IV rank 55.21%, expected move 19.78%. The collar on KTOS 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 28-day expiry.
Why this collar structure on KTOS specifically: IV regime affects collar pricing on both sides; mid-range KTOS IV at 69.00% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 19.78% (roughly $10.52 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated KTOS expiries trade a higher absolute premium for lower per-day decay. Position sizing on KTOS should anchor to the underlying notional of $53.16 per share and to the trader's directional view on KTOS stock.
KTOS collar setup
The KTOS 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 KTOS near $53.16, the first option leg uses a $56.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KTOS chain at a 28-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 KTOS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $53.16 | long |
| Sell 1 | Call | $56.00 | $2.45 |
| Buy 1 | Put | $51.00 | $3.45 |
KTOS collar risk and reward
- Net Premium / Debit
- -$5,416.00
- Max Profit (per contract)
- $184.00
- Max Loss (per contract)
- -$316.00
- Breakeven(s)
- $54.16
- Risk / Reward Ratio
- 0.582
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.
KTOS collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on KTOS. 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% | -$316.00 |
| $11.76 | -77.9% | -$316.00 |
| $23.52 | -55.8% | -$316.00 |
| $35.27 | -33.7% | -$316.00 |
| $47.02 | -11.5% | -$316.00 |
| $58.77 | +10.6% | +$184.00 |
| $70.53 | +32.7% | +$184.00 |
| $82.28 | +54.8% | +$184.00 |
| $94.03 | +76.9% | +$184.00 |
| $105.79 | +99.0% | +$184.00 |
When traders use collar on KTOS
Collars on KTOS hedge an existing long KTOS 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.
KTOS thesis for this collar
The market-implied 1-standard-deviation range for KTOS extends from approximately $42.64 on the downside to $63.68 on the upside. A KTOS collar hedges an existing long KTOS 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 KTOS IV rank near 55.21% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on KTOS should anchor more to the directional view and the expected-move geometry. As a Industrials name, KTOS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KTOS-specific events.
KTOS 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. KTOS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move KTOS alongside the broader basket even when KTOS-specific fundamentals are unchanged. Always rebuild the position from current KTOS chain quotes before placing a trade.
Frequently asked questions
- What is a collar on KTOS?
- A collar on KTOS is the collar strategy applied to KTOS (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 KTOS stock trading near $53.16, the strikes shown on this page are snapped to the nearest listed KTOS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are KTOS 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 KTOS collar priced from the end-of-day chain at a 30-day expiry (ATM IV 69.00%), the computed maximum profit is $184.00 per contract and the computed maximum loss is -$316.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a KTOS collar?
- The breakeven for the KTOS collar priced on this page is roughly $54.16 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 KTOS market-implied 1-standard-deviation expected move is approximately 19.78%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on KTOS?
- Collars on KTOS hedge an existing long KTOS 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 KTOS implied volatility affect this collar?
- KTOS ATM IV is at 69.00% with IV rank near 55.21%, 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.