How are LAD 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 LAD collar priced from the end-of-day chain at a 30-day expiry (ATM IV 34.00%), the computed maximum profit is $1,789.50 per contract and the computed maximum loss is -$1,210.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a LAD collar?

The breakeven for the LAD collar priced on this page is roughly $292.11 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 LAD market-implied 1-standard-deviation expected move is approximately 9.75%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current LAD implied volatility affect this collar?

LAD ATM IV is at 34.00% with IV rank near 16.64%, 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.

LAD Collar Strategy

LAD (Lithia Motors, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NYSE.

Lithia Motors, Inc. operates as a prominent automotive retail enterprise throughout the United States. Its business is strategically divided into three key segments: Domestic, Import, and Luxury vehicle sales. The company's comprehensive offerings encompass the sale of both brand-new and pre-owned automobiles, alongside a full spectrum of vehicle financing solutions. Customers can also access extended warranties, various insurance contracts, and protection services designed for vehicle and theft security. Beyond sales, Lithia Motors delivers automotive repair and maintenance expertise, and distributes vehicle body components and parts under its proprietary Driveway and GreenCars brands. As of February 18, 2022, the company managed 278 physical dealerships and extended its reach online through more than 300 distinct websites.

LAD (Lithia Motors, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $6.66B, a trailing P/E of 9.62, a beta of 1.26 versus the broader market, a 52-week range of 239.78-360.56, average daily share volume of 309K, a public-listing history dating back to 1996, approximately 30K full-time employees. These structural characteristics shape how LAD stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.26 places LAD roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 9.62 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. LAD pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on LAD?

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 LAD snapshot

As of June 29, 2026, spot at $291.13, ATM IV 34.00%, IV rank 16.64%, expected move 9.75%. The collar on LAD 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 18-day expiry.

Why this collar structure on LAD specifically: IV regime affects collar pricing on both sides; compressed LAD IV at 34.00% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 9.75% (roughly $28.38 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated LAD expiries trade a higher absolute premium for lower per-day decay. Position sizing on LAD should anchor to the underlying notional of $291.13 per share and to the trader's directional view on LAD stock.

LAD collar setup

The LAD 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 LAD near $291.13, the first option leg uses a $310.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LAD chain at a 18-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 LAD shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$291.13	long
Sell 1	Call	$310.00	$3.13
Buy 1	Put	$280.00	$4.10

LAD collar risk and reward

Net Premium / Debit: -$29,210.50
Max Profit (per contract): $1,789.50
Max Loss (per contract): -$1,210.50
Breakeven(s): $292.11
Risk / Reward Ratio: 1.478

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.

LAD collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on LAD. 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%	-$1,210.50
$64.38	-77.9%	-$1,210.50
$128.75	-55.8%	-$1,210.50
$193.12	-33.7%	-$1,210.50
$257.49	-11.6%	-$1,210.50
$321.86	+10.6%	+$1,789.50
$386.23	+32.7%	+$1,789.50
$450.60	+54.8%	+$1,789.50
$514.96	+76.9%	+$1,789.50
$579.33	+99.0%	+$1,789.50

When traders use collar on LAD

Collars on LAD hedge an existing long LAD 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.

LAD thesis for this collar

The market-implied 1-standard-deviation range for LAD extends from approximately $262.75 on the downside to $319.51 on the upside. A LAD collar hedges an existing long LAD 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 LAD IV rank near 16.64% 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 LAD at 34.00%. As a Consumer Cyclical name, LAD options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LAD-specific events.

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

Frequently asked questions

What is a collar on LAD?: A collar on LAD is the collar strategy applied to LAD (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 LAD stock trading near $291.13, the strikes shown on this page are snapped to the nearest listed LAD chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are LAD 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 LAD collar priced from the end-of-day chain at a 30-day expiry (ATM IV 34.00%), the computed maximum profit is $1,789.50 per contract and the computed maximum loss is -$1,210.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a LAD collar?: The breakeven for the LAD collar priced on this page is roughly $292.11 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 LAD market-implied 1-standard-deviation expected move is approximately 9.75%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on LAD?: Collars on LAD hedge an existing long LAD 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 LAD implied volatility affect this collar?: LAD ATM IV is at 34.00% with IV rank near 16.64%, 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.