PM Collar Strategy
PM (Philip Morris International Inc.), in the Consumer Defensive sector, (Tobacco industry), listed on NYSE.
Philip Morris International Inc. operates as a tobacco company working to delivers a smoke-free future and evolving portfolio for the long-term to include products outside of the tobacco and nicotine sector. The company's product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor, and oral nicotine products that are sold in markets outside the United States. The company offers its smoke-free products under the HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro, HEETS FROM MARLBORO, Marlboro Dimensions, Marlboro HeatSticks, Parliament HeatSticks, and TEREA brands, as well as the KT&G-licensed brands, Fiit, and Miix. It also sells its products under the Marlboro, Parliament, Bond Street, Chesterfield, L&M, Lark, and Philip Morris brands. In addition, the company owns various cigarette brands, such as Dji Sam Soe, Sampoerna A, and Sampoerna U in Indonesia; and Fortune and Jackpot in the Philippines. The company sells its smoke-free products in 71 markets.
PM (Philip Morris International Inc.) trades in the Consumer Defensive sector, specifically Tobacco, with a market capitalization of approximately $292.87B, a trailing P/E of 26.47, a beta of 0.39 versus the broader market, a 52-week range of 142.11-191.3, average daily share volume of 4.9M, a public-listing history dating back to 2008, approximately 83K full-time employees. These structural characteristics shape how PM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.39 indicates PM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. PM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on PM?
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 PM snapshot
As of May 15, 2026, spot at $189.72, ATM IV 26.14%, IV rank 34.35%, expected move 7.50%. The collar on PM 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 PM specifically: IV regime affects collar pricing on both sides; mid-range PM IV at 26.14% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 7.50% (roughly $14.22 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 PM expiries trade a higher absolute premium for lower per-day decay. Position sizing on PM should anchor to the underlying notional of $189.72 per share and to the trader's directional view on PM stock.
PM collar setup
The PM 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 PM near $189.72, the first option leg uses a $200.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PM 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 PM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $189.72 | long |
| Sell 1 | Call | $200.00 | $1.93 |
| Buy 1 | Put | $180.00 | $2.03 |
PM collar risk and reward
- Net Premium / Debit
- -$18,982.00
- Max Profit (per contract)
- $1,018.00
- Max Loss (per contract)
- -$982.00
- Breakeven(s)
- $189.82
- Risk / Reward Ratio
- 1.037
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.
PM collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on PM. 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% | -$982.00 |
| $41.96 | -77.9% | -$982.00 |
| $83.90 | -55.8% | -$982.00 |
| $125.85 | -33.7% | -$982.00 |
| $167.80 | -11.6% | -$982.00 |
| $209.75 | +10.6% | +$1,018.00 |
| $251.69 | +32.7% | +$1,018.00 |
| $293.64 | +54.8% | +$1,018.00 |
| $335.59 | +76.9% | +$1,018.00 |
| $377.53 | +99.0% | +$1,018.00 |
When traders use collar on PM
Collars on PM hedge an existing long PM 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.
PM thesis for this collar
The market-implied 1-standard-deviation range for PM extends from approximately $175.50 on the downside to $203.94 on the upside. A PM collar hedges an existing long PM 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 PM IV rank near 34.35% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on PM should anchor more to the directional view and the expected-move geometry. As a Consumer Defensive name, PM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PM-specific events.
PM 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. PM positions also carry Consumer Defensive sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PM alongside the broader basket even when PM-specific fundamentals are unchanged. Always rebuild the position from current PM chain quotes before placing a trade.
Frequently asked questions
- What is a collar on PM?
- A collar on PM is the collar strategy applied to PM (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 PM stock trading near $189.72, the strikes shown on this page are snapped to the nearest listed PM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are PM 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 PM collar priced from the end-of-day chain at a 30-day expiry (ATM IV 26.14%), the computed maximum profit is $1,018.00 per contract and the computed maximum loss is -$982.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PM collar?
- The breakeven for the PM collar priced on this page is roughly $189.82 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 PM market-implied 1-standard-deviation expected move is approximately 7.50%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on PM?
- Collars on PM hedge an existing long PM 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 PM implied volatility affect this collar?
- PM ATM IV is at 26.14% with IV rank near 34.35%, 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.