How are PEP 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 PEP collar priced from the end-of-day chain at a 30-day expiry (ATM IV 22.85%), the computed maximum profit is $644.50 per contract and the computed maximum loss is -$855.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a PEP collar?

The breakeven for the PEP collar priced on this page is roughly $148.56 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 PEP market-implied 1-standard-deviation expected move is approximately 6.55%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current PEP implied volatility affect this collar?

PEP ATM IV is at 22.85% with IV rank near 42.47%, 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.

PEP Collar Strategy

PEP (PepsiCo, Inc.), in the Consumer Defensive sector, (Beverages - Non-Alcoholic industry), listed on NASDAQ.

PepsiCo, Inc. manufactures, markets, distributes, and sells various beverages and convenient foods worldwide. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China Region. It provides dips, cheese-flavored snacks, and spreads, as well as corn, potato, and tortilla chips; cereals, rice, pasta, mixes and syrups, granola bars, grits, oatmeal, rice cakes, simply granola, and side dishes; beverage concentrates, fountain syrups, and finished goods; ready-to-drink tea, coffee, and juices; dairy products; and sparkling water makers and related products. It serves wholesale and other distributors, foodservice customers, grocery stores, drug stores, convenience stores, discount/dollar stores, mass merchandisers, membership stores, hard discounters, e-commerce retailers and authorized independent bottlers, and others through a network of direct-store-delivery, customer warehouse, and distributor networks, as well as directly to consumers through e-commerce platforms and retailers. The company was founded in 1898 and is headquartered in Purchase, New York.

PEP (PepsiCo, Inc.) trades in the Consumer Defensive sector, specifically Beverages - Non-Alcoholic, with a market capitalization of approximately $204.04B, a trailing P/E of 23.34, a beta of 0.39 versus the broader market, a 52-week range of 127.6-171.48, average daily share volume of 6.3M, a public-listing history dating back to 1972, approximately 319K full-time employees. These structural characteristics shape how PEP stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.39 indicates PEP has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. PEP pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on PEP?

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 PEP snapshot

As of May 15, 2026, spot at $148.75, ATM IV 22.85%, IV rank 42.47%, expected move 6.55%. The collar on PEP 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 PEP specifically: IV regime affects collar pricing on both sides; mid-range PEP IV at 22.85% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.55% (roughly $9.74 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 PEP expiries trade a higher absolute premium for lower per-day decay. Position sizing on PEP should anchor to the underlying notional of $148.75 per share and to the trader's directional view on PEP stock.

PEP collar setup

The PEP 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 PEP near $148.75, the first option leg uses a $155.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PEP 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 PEP shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$148.75	long
Sell 1	Call	$155.00	$1.22
Buy 1	Put	$140.00	$1.02

PEP collar risk and reward

Net Premium / Debit: -$14,855.50
Max Profit (per contract): $644.50
Max Loss (per contract): -$855.50
Breakeven(s): $148.56
Risk / Reward Ratio: 0.753

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.

PEP collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on PEP. 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%	-$855.50
$32.90	-77.9%	-$855.50
$65.79	-55.8%	-$855.50
$98.68	-33.7%	-$855.50
$131.56	-11.6%	-$855.50
$164.45	+10.6%	+$644.50
$197.34	+32.7%	+$644.50
$230.23	+54.8%	+$644.50
$263.12	+76.9%	+$644.50
$296.01	+99.0%	+$644.50

When traders use collar on PEP

Collars on PEP hedge an existing long PEP 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.

PEP thesis for this collar

The market-implied 1-standard-deviation range for PEP extends from approximately $139.01 on the downside to $158.49 on the upside. A PEP collar hedges an existing long PEP 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 PEP IV rank near 42.47% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on PEP should anchor more to the directional view and the expected-move geometry. As a Consumer Defensive name, PEP options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PEP-specific events.

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

Frequently asked questions

What is a collar on PEP?: A collar on PEP is the collar strategy applied to PEP (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 PEP stock trading near $148.75, the strikes shown on this page are snapped to the nearest listed PEP chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are PEP 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 PEP collar priced from the end-of-day chain at a 30-day expiry (ATM IV 22.85%), the computed maximum profit is $644.50 per contract and the computed maximum loss is -$855.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a PEP collar?: The breakeven for the PEP collar priced on this page is roughly $148.56 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 PEP market-implied 1-standard-deviation expected move is approximately 6.55%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on PEP?: Collars on PEP hedge an existing long PEP 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 PEP implied volatility affect this collar?: PEP ATM IV is at 22.85% with IV rank near 42.47%, 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.