How are MCY 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 MCY collar priced from the end-of-day chain at a 30-day expiry (ATM IV 29.40%), the computed maximum profit is $577.50 per contract and the computed maximum loss is -$422.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a MCY collar?

The breakeven for the MCY collar priced on this page is roughly $99.23 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 MCY market-implied 1-standard-deviation expected move is approximately 8.43%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current MCY implied volatility affect this collar?

MCY ATM IV is at 29.40% with IV rank near 31.55%, 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.

MCY Collar Strategy

MCY (Mercury General Corporation), in the Financial Services sector, (Insurance - Property & Casualty industry), listed on NYSE.

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, fire, and other hazards. The company sells its policies through a network of independent agents and insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

MCY (Mercury General Corporation) trades in the Financial Services sector, specifically Insurance - Property & Casualty, with a market capitalization of approximately $5.52B, a trailing P/E of 6.57, a beta of 0.94 versus the broader market, a 52-week range of 59.01-102.37, average daily share volume of 272K, a public-listing history dating back to 1985, approximately 4K full-time employees. These structural characteristics shape how MCY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.94 places MCY roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 6.57 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. MCY pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on MCY?

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 MCY snapshot

As of May 15, 2026, spot at $98.35, ATM IV 29.40%, IV rank 31.55%, expected move 8.43%. The collar on MCY 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 34-day expiry.

Why this collar structure on MCY specifically: IV regime affects collar pricing on both sides; mid-range MCY IV at 29.40% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 8.43% (roughly $8.29 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated MCY expiries trade a higher absolute premium for lower per-day decay. Position sizing on MCY should anchor to the underlying notional of $98.35 per share and to the trader's directional view on MCY stock.

MCY collar setup

The MCY 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 MCY near $98.35, the first option leg uses a $105.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed MCY chain at a 34-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 MCY shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$98.35	long
Sell 1	Call	$105.00	$1.10
Buy 1	Put	$95.00	$1.98

MCY collar risk and reward

Net Premium / Debit: -$9,922.50
Max Profit (per contract): $577.50
Max Loss (per contract): -$422.50
Breakeven(s): $99.23
Risk / Reward Ratio: 1.367

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.

MCY collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on MCY. 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%	-$422.50
$21.75	-77.9%	-$422.50
$43.50	-55.8%	-$422.50
$65.24	-33.7%	-$422.50
$86.99	-11.6%	-$422.50
$108.73	+10.6%	+$577.50
$130.48	+32.7%	+$577.50
$152.22	+54.8%	+$577.50
$173.97	+76.9%	+$577.50
$195.71	+99.0%	+$577.50

When traders use collar on MCY

Collars on MCY hedge an existing long MCY 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.

MCY thesis for this collar

The market-implied 1-standard-deviation range for MCY extends from approximately $90.06 on the downside to $106.64 on the upside. A MCY collar hedges an existing long MCY 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 MCY IV rank near 31.55% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on MCY should anchor more to the directional view and the expected-move geometry. As a Financial Services name, MCY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to MCY-specific events.

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

Frequently asked questions

What is a collar on MCY?: A collar on MCY is the collar strategy applied to MCY (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 MCY stock trading near $98.35, the strikes shown on this page are snapped to the nearest listed MCY chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are MCY 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 MCY collar priced from the end-of-day chain at a 30-day expiry (ATM IV 29.40%), the computed maximum profit is $577.50 per contract and the computed maximum loss is -$422.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a MCY collar?: The breakeven for the MCY collar priced on this page is roughly $99.23 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 MCY market-implied 1-standard-deviation expected move is approximately 8.43%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on MCY?: Collars on MCY hedge an existing long MCY 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 MCY implied volatility affect this collar?: MCY ATM IV is at 29.40% with IV rank near 31.55%, 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.