MEC Collar Strategy
MEC (Mayville Engineering Company, Inc.), in the Industrials sector, (Manufacturing - Metal Fabrication industry), listed on NYSE.
Mayville Engineering Company, Inc., together with its subsidiaries, operates as a contract manufacturer that serves the heavy and medium duty commercial vehicle, construction and access equipment, powersports, agriculture, military, and other end markets in the United States. The company provides a range of prototyping and tooling, production fabrication, coating, assembly, and aftermarket components. It also supplies engineered components to original equipment manufacturers. The company was founded in 1945 and is headquartered in Mayville, Wisconsin.
MEC (Mayville Engineering Company, Inc.) trades in the Industrials sector, specifically Manufacturing - Metal Fabrication, with a market capitalization of approximately $525.7M, a beta of 1.24 versus the broader market, a 52-week range of 12.1-28.145, average daily share volume of 176K, a public-listing history dating back to 2019, approximately 2K full-time employees. These structural characteristics shape how MEC stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.24 places MEC roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a collar on MEC?
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 MEC snapshot
As of May 15, 2026, spot at $25.72, ATM IV 62.00%, IV rank 16.21%, expected move 17.77%. The collar on MEC 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 MEC specifically: IV regime affects collar pricing on both sides; compressed MEC IV at 62.00% 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 $4.57 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 MEC expiries trade a higher absolute premium for lower per-day decay. Position sizing on MEC should anchor to the underlying notional of $25.72 per share and to the trader's directional view on MEC stock.
MEC collar setup
The MEC 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 MEC near $25.72, the first option leg uses a $27.01 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed MEC 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 MEC shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $25.72 | long |
| Sell 1 | Call | $27.01 | N/A |
| Buy 1 | Put | $24.43 | N/A |
MEC collar risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
MEC collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on MEC. 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.
When traders use collar on MEC
Collars on MEC hedge an existing long MEC 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.
MEC thesis for this collar
The market-implied 1-standard-deviation range for MEC extends from approximately $21.15 on the downside to $30.29 on the upside. A MEC collar hedges an existing long MEC 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 MEC IV rank near 16.21% 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 MEC at 62.00%. As a Industrials name, MEC options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to MEC-specific events.
MEC 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. MEC positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move MEC alongside the broader basket even when MEC-specific fundamentals are unchanged. Always rebuild the position from current MEC chain quotes before placing a trade.
Frequently asked questions
- What is a collar on MEC?
- A collar on MEC is the collar strategy applied to MEC (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 MEC stock trading near $25.72, the strikes shown on this page are snapped to the nearest listed MEC chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are MEC 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 MEC collar priced from the end-of-day chain at a 30-day expiry (ATM IV 62.00%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a MEC collar?
- The breakeven for the MEC collar priced on this page is no defined breakeven on the modeled curve 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 MEC market-implied 1-standard-deviation expected move 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 MEC?
- Collars on MEC hedge an existing long MEC 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 MEC implied volatility affect this collar?
- MEC ATM IV is at 62.00% with IV rank near 16.21%, 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.