How are PSMT 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 PSMT collar priced from the end-of-day chain at a 30-day expiry (ATM IV 30.50%), the computed maximum profit is $999.50 per contract and the computed maximum loss is -$1,000.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a PSMT collar?

The breakeven for the PSMT collar priced on this page is roughly $160.01 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 PSMT market-implied 1-standard-deviation expected move is approximately 8.74%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current PSMT implied volatility affect this collar?

PSMT ATM IV is at 30.50% with IV rank near 28.65%, 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.

PSMT Collar Strategy

PSMT (PriceSmart, Inc.), in the Consumer Defensive sector, (Discount Stores industry), listed on NASDAQ.

PriceSmart, Inc. owns and operates U.S. style membership shopping warehouse clubs in the United States, Central America, the Caribbean, and Colombia. Its warehouse clubs sell brand name and private label consumer products, essential goods, fresh produce, prepared foods, and fresh-baked goods, as well as provides services, such as optical, tire center, and other ancillary services. The company also operates Click & Go, an e-commerce platform for online ordering, curbside pickup, and delivery services. As of March 29, 2022, it operated 49 warehouse clubs in 12 countries and one U.S. territory. PriceSmart, Inc. was incorporated in 1994 and is headquartered in San Diego, California.

PSMT (PriceSmart, Inc.) trades in the Consumer Defensive sector, specifically Discount Stores, with a market capitalization of approximately $4.88B, a trailing P/E of 31.25, a beta of 0.78 versus the broader market, a 52-week range of 99.98-165.46, average daily share volume of 233K, a public-listing history dating back to 1997, approximately 12K full-time employees. These structural characteristics shape how PSMT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.78 places PSMT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. PSMT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a collar on PSMT?

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 PSMT snapshot

As of May 15, 2026, spot at $159.63, ATM IV 30.50%, IV rank 28.65%, expected move 8.74%. The collar on PSMT 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 PSMT specifically: IV regime affects collar pricing on both sides; compressed PSMT IV at 30.50% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 8.74% (roughly $13.96 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 PSMT expiries trade a higher absolute premium for lower per-day decay. Position sizing on PSMT should anchor to the underlying notional of $159.63 per share and to the trader's directional view on PSMT stock.

PSMT collar setup

The PSMT 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 PSMT near $159.63, the first option leg uses a $170.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PSMT 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 PSMT shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$159.63	long
Sell 1	Call	$170.00	$2.50
Buy 1	Put	$150.00	$2.88

PSMT collar risk and reward

Net Premium / Debit: -$16,000.50
Max Profit (per contract): $999.50
Max Loss (per contract): -$1,000.50
Breakeven(s): $160.01
Risk / Reward Ratio: 0.999

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.

PSMT collar payoff curve

Modeled P&L at expiration across a range of underlying prices for the collar on PSMT. 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%	-$1,000.50
$35.30	-77.9%	-$1,000.50
$70.60	-55.8%	-$1,000.50
$105.89	-33.7%	-$1,000.50
$141.19	-11.6%	-$1,000.50
$176.48	+10.6%	+$999.50
$211.77	+32.7%	+$999.50
$247.07	+54.8%	+$999.50
$282.36	+76.9%	+$999.50
$317.66	+99.0%	+$999.50

When traders use collar on PSMT

Collars on PSMT hedge an existing long PSMT 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.

PSMT thesis for this collar

The market-implied 1-standard-deviation range for PSMT extends from approximately $145.67 on the downside to $173.59 on the upside. A PSMT collar hedges an existing long PSMT 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 PSMT IV rank near 28.65% 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 PSMT at 30.50%. As a Consumer Defensive name, PSMT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PSMT-specific events.

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

Frequently asked questions

What is a collar on PSMT?: A collar on PSMT is the collar strategy applied to PSMT (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 PSMT stock trading near $159.63, the strikes shown on this page are snapped to the nearest listed PSMT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are PSMT 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 PSMT collar priced from the end-of-day chain at a 30-day expiry (ATM IV 30.50%), the computed maximum profit is $999.50 per contract and the computed maximum loss is -$1,000.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a PSMT collar?: The breakeven for the PSMT collar priced on this page is roughly $160.01 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 PSMT market-implied 1-standard-deviation expected move is approximately 8.74%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
When should you consider a collar on PSMT?: Collars on PSMT hedge an existing long PSMT 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 PSMT implied volatility affect this collar?: PSMT ATM IV is at 30.50% with IV rank near 28.65%, 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.