How are LOCO 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 LOCO collar priced from the end-of-day chain at a 30-day expiry (ATM IV 43.00%), the computed maximum profit is $68.50 per contract and the computed maximum loss is -$131.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a LOCO collar?

The breakeven for the LOCO collar priced on this page is roughly $17.32 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 LOCO market-implied 1-standard-deviation expected move is approximately 12.33%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current LOCO implied volatility affect this collar?

LOCO ATM IV is at 43.00% with IV rank near 14.44%, 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.

LOCO Collar Strategy

LOCO (El Pollo Loco Holdings, Inc.), in the Consumer Cyclical sector, (Restaurants industry), listed on NASDAQ.

El Pollo Loco Holdings, Inc., primarily operating through its El Pollo Loco, Inc. subsidiary, is engaged in the development, franchising, licensing, and direct management of quick-service restaurants under the El Pollo Loco brand. By May 4, 2022, its network encompassed 480 establishments: 189 company-owned locations and 291 franchised outlets situated across California, Nevada, Arizona, Texas, Utah, and Louisiana. The company also licenses a single restaurant operating in the Philippines. Founded in 1975 and headquartered in Costa Mesa, California, the company adopted its current name, El Pollo Loco Holdings, Inc., in April 2014, having previously been known as Chicken Acquisition Corp.

LOCO (El Pollo Loco Holdings, Inc.) trades in the Consumer Cyclical sector, specifically Restaurants, with a market capitalization of approximately $512.3M, a trailing P/E of 16.96, a beta of 0.71 versus the broader market, a 52-week range of 8.985-16.91, average daily share volume of 332K, a public-listing history dating back to 2014, approximately 4K full-time employees. These structural characteristics shape how LOCO stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.71 places LOCO roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a collar on LOCO?

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 LOCO snapshot

As of June 30, 2026, spot at $16.94, ATM IV 43.00%, IV rank 14.44%, expected move 12.33%. The collar on LOCO 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 80-day expiry.

Why this collar structure on LOCO specifically: IV regime affects collar pricing on both sides; compressed LOCO IV at 43.00% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 12.33% (roughly $2.09 on the underlying). The 80-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated LOCO expiries trade a higher absolute premium for lower per-day decay. Position sizing on LOCO should anchor to the underlying notional of $16.94 per share and to the trader's directional view on LOCO stock.

LOCO collar setup

The LOCO 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 LOCO near $16.94, the first option leg uses a $18.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LOCO chain at a 80-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 LOCO shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$16.94	long
Sell 1	Call	$18.00	$0.60
Buy 1	Put	$16.00	$0.98

LOCO collar risk and reward

Net Premium / Debit: -$1,731.50
Max Profit (per contract): $68.50
Max Loss (per contract): -$131.50
Breakeven(s): $17.32
Risk / Reward Ratio: 0.521

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.

LOCO collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on LOCO. 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	-99.9%	-$131.50
$3.75	-77.8%	-$131.50
$7.50	-55.7%	-$131.50
$11.24	-33.6%	-$131.50
$14.99	-11.5%	-$131.50
$18.73	+10.6%	+$68.50
$22.48	+32.7%	+$68.50
$26.22	+54.8%	+$68.50
$29.97	+76.9%	+$68.50
$33.71	+99.0%	+$68.50

When traders use collar on LOCO

Collars on LOCO hedge an existing long LOCO 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.

LOCO thesis for this collar

The market-implied 1-standard-deviation range for LOCO extends from approximately $14.85 on the downside to $19.03 on the upside. A LOCO collar hedges an existing long LOCO 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 LOCO IV rank near 14.44% 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 LOCO at 43.00%. As a Consumer Cyclical name, LOCO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LOCO-specific events.

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

Frequently asked questions

What is a collar on LOCO?: A collar on LOCO is the collar strategy applied to LOCO (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 LOCO stock trading near $16.94, the strikes shown on this page are snapped to the nearest listed LOCO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are LOCO 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 LOCO collar priced from the end-of-day chain at a 30-day expiry (ATM IV 43.00%), the computed maximum profit is $68.50 per contract and the computed maximum loss is -$131.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a LOCO collar?: The breakeven for the LOCO collar priced on this page is roughly $17.32 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 LOCO market-implied 1-standard-deviation expected move is approximately 12.33%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on LOCO?: Collars on LOCO hedge an existing long LOCO 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 LOCO implied volatility affect this collar?: LOCO ATM IV is at 43.00% with IV rank near 14.44%, 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.