KTOS Collar Strategy
KTOS (Kratos Defense & Security Solutions, Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NASDAQ.
Kratos Defense & Security Solutions, Inc. primarily functions as a contractor for the United States Department of Defense. Its business operations are organized into two distinct divisions: Kratos Government Solutions and Unmanned Systems. The Kratos Government Solutions segment delivers a comprehensive suite of products and services, including advanced microwave electronics, solutions for space and satellite communications, specialized training and cybersecurity/warfare capabilities, C5ISR (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance) and modular systems, cutting-edge turbine technologies, and essential defense and rocket support services. Meanwhile, the Unmanned Systems division is dedicated to developing and supplying autonomous platforms, specifically unmanned aerial, ground, and maritime systems. Kratos caters to an extensive client base, which includes various national security organizations, the DoD, intelligence and classified agencies, international government bodies, and both domestic and global commercial enterprises. The company was established in 1994 and its corporate headquarters are located in San Diego, California.
KTOS (Kratos Defense & Security Solutions, Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $12.11B, a trailing P/E of 394.17, a beta of 1.09 versus the broader market, a 52-week range of 43.09-134, average daily share volume of 4.6M, 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 1.09 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 394.17 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.
KTOS snapshot
As of August 14, 2026, spot at $64.41, ATM IV 61.97%, IV rank 23.17%, expected move 17.77%. The collar on KTOS below is built from the August 14, 2026 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; compressed KTOS IV at 61.97% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 17.77% (roughly $11.44 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 $64.41 per share and to the trader's directional view on KTOS stock.
KTOS collar setup
The KTOS collar below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With KTOS at $64.41 on that close, the first option leg uses a $68.00 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 | $64.41 | long |
| Sell 1 | Call | $68.00 | $2.95 |
| Buy 1 | Put | $61.00 | $2.85 |
KTOS collar risk and reward
- Net Premium / Debit
- -$6,431.00
- Max Profit (per contract)
- $369.00
- Max Loss (per contract)
- -$331.00
- Breakeven(s)
- $64.31
- Risk / Reward Ratio
- 1.115
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% | -$331.00 |
| $14.25 | -77.9% | -$331.00 |
| $28.49 | -55.8% | -$331.00 |
| $42.73 | -33.7% | -$331.00 |
| $56.97 | -11.5% | -$331.00 |
| $71.21 | +10.6% | +$369.00 |
| $85.45 | +32.7% | +$369.00 |
| $99.69 | +54.8% | +$369.00 |
| $113.93 | +76.9% | +$369.00 |
| $128.17 | +99.0% | +$369.00 |
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 $52.97 on the downside to $75.85 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 23.17% 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 KTOS at 61.97%. 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 at $64.41 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed KTOS chain strike and the premiums come straight from that session's 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 August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 61.97%), the computed maximum profit is $369.00 per contract and the computed maximum loss is -$331.00 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 $64.31 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The KTOS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 17.77%; 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 61.97% with IV rank near 23.17%, 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.