PMT Collar Strategy
PMT (PennyMac Mortgage Investment Trust), in the Real Estate sector, (REIT - Mortgage industry), listed on NYSE.
PennyMac Mortgage Investment Trust, a specialty finance company, primarily invests in mortgage-related assets in the United States. The company's Credit Sensitive Strategies segment invests in credit risk transfer (CRT) agreements, CRT securities, distressed loans, real estate, and non-agency subordinated bonds. Its Interest Rate Sensitive Strategies segment engages in investing in mortgage servicing rights, excess servicing spreads, and agency and senior non-agency mortgage-backed securities (MBS), as well as related interest rate hedging activities. The company's Correspondent Production segment is involved in purchasing, pooling, and reselling newly originated prime credit residential loans directly or in the form of MBS. PNMAC Capital Management, LLC acts as the manager of PennyMac Mortgage Investment Trust. The company qualifies as a real estate investment trust for federal income tax purposes.
PMT (PennyMac Mortgage Investment Trust) trades in the Real Estate sector, specifically REIT - Mortgage, with a market capitalization of approximately $916.5M, a trailing P/E of 6.41, a beta of 1.18 versus the broader market, a 52-week range of 10.295-13.81, average daily share volume of 1.2M, a public-listing history dating back to 2009, approximately 7 full-time employees. These structural characteristics shape how PMT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.18 places PMT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 6.41 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. PMT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on PMT?
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 PMT snapshot
As of May 15, 2026, spot at $10.33, ATM IV 20.20%, IV rank 4.24%, expected move 5.79%. The collar on PMT 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 PMT specifically: IV regime affects collar pricing on both sides; compressed PMT IV at 20.20% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 5.79% (roughly $0.60 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 PMT expiries trade a higher absolute premium for lower per-day decay. Position sizing on PMT should anchor to the underlying notional of $10.33 per share and to the trader's directional view on PMT stock.
PMT collar setup
The PMT 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 PMT near $10.33, the first option leg uses a $10.85 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PMT 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 PMT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $10.33 | long |
| Sell 1 | Call | $10.85 | N/A |
| Buy 1 | Put | $9.81 | N/A |
PMT 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.
PMT collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on PMT. 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 PMT
Collars on PMT hedge an existing long PMT 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.
PMT thesis for this collar
The market-implied 1-standard-deviation range for PMT extends from approximately $9.73 on the downside to $10.93 on the upside. A PMT collar hedges an existing long PMT 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 PMT IV rank near 4.24% 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 PMT at 20.20%. As a Real Estate name, PMT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PMT-specific events.
PMT 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. PMT positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PMT alongside the broader basket even when PMT-specific fundamentals are unchanged. Always rebuild the position from current PMT chain quotes before placing a trade.
Frequently asked questions
- What is a collar on PMT?
- A collar on PMT is the collar strategy applied to PMT (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 PMT stock trading near $10.33, the strikes shown on this page are snapped to the nearest listed PMT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are PMT 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 PMT collar priced from the end-of-day chain at a 30-day expiry (ATM IV 20.20%), 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 PMT collar?
- The breakeven for the PMT 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 PMT market-implied 1-standard-deviation expected move is approximately 5.79%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on PMT?
- Collars on PMT hedge an existing long PMT 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 PMT implied volatility affect this collar?
- PMT ATM IV is at 20.20% with IV rank near 4.24%, 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.