How are LITE 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 LITE collar priced from the end-of-day chain at a 30-day expiry (ATM IV 98.64%), the computed maximum profit is $2,870.00 per contract and the computed maximum loss is -$7,130.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a LITE collar?

The breakeven for the LITE collar priced on this page is roughly $1,031.30 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 LITE market-implied 1-standard-deviation expected move is approximately 28.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current LITE implied volatility affect this collar?

LITE ATM IV is at 98.64% with IV rank near 52.17%, 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.

LITE Collar Strategy

LITE (Lumentum Holdings Inc.), in the Technology sector, (Communication Equipment industry), listed on NASDAQ.

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments, Optical Communications (OpComms) and Commercial Lasers (Lasers). The OpComms segment offers components, modules, and subsystems that enable the transmission and transport of video, audio, and data over high-capacity fiber optic cables. It offers tunable transponders, transceivers, and transmitter modules; tunable lasers, receivers, and modulators; transport products, such as reconfigurable optical add/drop multiplexers, amplifiers, and optical channel monitors, as well as components, including 980nm, multi-mode, and Raman pumps; and switches, attenuators, photodetectors, gain flattening filters, isolators, wavelength-division multiplexing filters, arrayed waveguide gratings, multiplex/de-multiplexers, and integrated passive modules. This segment also provides Super Transport Blade, which integrates optical transport functions into a single-slot blade; vertical-cavity surface-emitting lasers; directly modulated and electro-absorption modulated lasers; and laser illumination sources for 3D sensing systems. It serves customers in telecommunications, data communications, and consumer and industrial markets.

LITE (Lumentum Holdings Inc.) trades in the Technology sector, specifically Communication Equipment, with a market capitalization of approximately $80.16B, a trailing P/E of 167.47, a beta of 1.53 versus the broader market, a 52-week range of 71.04-1085.68, average daily share volume of 6.4M, a public-listing history dating back to 2015, approximately 7K full-time employees. These structural characteristics shape how LITE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.53 indicates LITE has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 167.47 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 LITE?

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 LITE snapshot

As of May 14, 2026, spot at $1,009.10, ATM IV 98.64%, IV rank 52.17%, expected move 28.28%. The collar on LITE 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 LITE specifically: IV regime affects collar pricing on both sides; mid-range LITE IV at 98.64% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 28.28% (roughly $285.38 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 LITE expiries trade a higher absolute premium for lower per-day decay. Position sizing on LITE should anchor to the underlying notional of $1,009.10 per share and to the trader's directional view on LITE stock.

LITE collar setup

The LITE 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 LITE near $1,009.10, the first option leg uses a $1,060.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LITE 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 LITE shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$1,009.10	long
Sell 1	Call	$1,060.00	$70.60
Buy 1	Put	$960.00	$92.80

LITE collar risk and reward

Net Premium / Debit: -$103,130.00
Max Profit (per contract): $2,870.00
Max Loss (per contract): -$7,130.00
Breakeven(s): $1,031.30
Risk / Reward Ratio: 0.403

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.

LITE collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on LITE. 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%	-$7,130.00
$223.13	-77.9%	-$7,130.00
$446.24	-55.8%	-$7,130.00
$669.36	-33.7%	-$7,130.00
$892.48	-11.6%	-$7,130.00
$1,115.59	+10.6%	+$2,870.00
$1,338.71	+32.7%	+$2,870.00
$1,561.83	+54.8%	+$2,870.00
$1,784.94	+76.9%	+$2,870.00
$2,008.06	+99.0%	+$2,870.00

When traders use collar on LITE

Collars on LITE hedge an existing long LITE 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.

LITE thesis for this collar

The market-implied 1-standard-deviation range for LITE extends from approximately $723.72 on the downside to $1,294.48 on the upside. A LITE collar hedges an existing long LITE 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 LITE IV rank near 52.17% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on LITE should anchor more to the directional view and the expected-move geometry. As a Technology name, LITE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LITE-specific events.

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

Frequently asked questions

What is a collar on LITE?: A collar on LITE is the collar strategy applied to LITE (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 LITE stock trading near $1,009.10, the strikes shown on this page are snapped to the nearest listed LITE chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are LITE 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 LITE collar priced from the end-of-day chain at a 30-day expiry (ATM IV 98.64%), the computed maximum profit is $2,870.00 per contract and the computed maximum loss is -$7,130.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a LITE collar?: The breakeven for the LITE collar priced on this page is roughly $1,031.30 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 LITE market-implied 1-standard-deviation expected move is approximately 28.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on LITE?: Collars on LITE hedge an existing long LITE 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 LITE implied volatility affect this collar?: LITE ATM IV is at 98.64% with IV rank near 52.17%, 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.