RDN Collar Strategy
RDN (Radian Group Inc.), in the Financial Services sector, (Insurance - Specialty industry), listed on NYSE.
Radian Group Inc., together with its subsidiaries, engages in the mortgage and real estate services business in the United States. Its Mortgage segment offers credit-related insurance coverage primarily through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management, contract underwriting, and fulfillment solutions. This segment primarily serves mortgage originators, such as mortgage banks, commercial banks, savings institutions, credit unions, and community banks. The company's Homegenius segment offers title services, including a suite of insurance and non-insurance title, tax and title data, centralized recording, document retrieval and default curative title services, and deed and property reports, as well as closing and settlement services comprising electronic execution and traditional signing services; real estate valuation products and services; and asset management services, as well as a suite of real estate technology products and services to facilitate real estate transactions, such as software as a service solutions. This segment serves consumers, mortgage lenders, mortgage and real estate investors, government-sponsored enterprises, and real estate brokers and agents. The company was founded in 1977 and is headquartered in Wayne, Pennsylvania.
RDN (Radian Group Inc.) trades in the Financial Services sector, specifically Insurance - Specialty, with a market capitalization of approximately $4.88B, a trailing P/E of 8.93, a beta of 0.76 versus the broader market, a 52-week range of 31.5-38.84, average daily share volume of 1.4M, a public-listing history dating back to 1992, approximately 1K full-time employees. These structural characteristics shape how RDN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.76 places RDN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 8.93 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. RDN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on RDN?
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 RDN snapshot
As of May 15, 2026, spot at $37.05, ATM IV 23.70%, IV rank 3.37%, expected move 6.79%. The collar on RDN 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 98-day expiry.
Why this collar structure on RDN specifically: IV regime affects collar pricing on both sides; compressed RDN IV at 23.70% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.79% (roughly $2.52 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated RDN expiries trade a higher absolute premium for lower per-day decay. Position sizing on RDN should anchor to the underlying notional of $37.05 per share and to the trader's directional view on RDN stock.
RDN collar setup
The RDN 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 RDN near $37.05, the first option leg uses a $39.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RDN chain at a 98-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 RDN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $37.05 | long |
| Sell 1 | Call | $39.00 | $1.08 |
| Buy 1 | Put | $35.00 | $1.68 |
RDN collar risk and reward
- Net Premium / Debit
- -$3,765.00
- Max Profit (per contract)
- $135.00
- Max Loss (per contract)
- -$265.00
- Breakeven(s)
- $37.65
- Risk / Reward Ratio
- 0.509
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.
RDN collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on RDN. 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% | -$265.00 |
| $8.20 | -77.9% | -$265.00 |
| $16.39 | -55.8% | -$265.00 |
| $24.58 | -33.7% | -$265.00 |
| $32.77 | -11.5% | -$265.00 |
| $40.96 | +10.6% | +$135.00 |
| $49.16 | +32.7% | +$135.00 |
| $57.35 | +54.8% | +$135.00 |
| $65.54 | +76.9% | +$135.00 |
| $73.73 | +99.0% | +$135.00 |
When traders use collar on RDN
Collars on RDN hedge an existing long RDN 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.
RDN thesis for this collar
The market-implied 1-standard-deviation range for RDN extends from approximately $34.53 on the downside to $39.57 on the upside. A RDN collar hedges an existing long RDN 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 RDN IV rank near 3.37% 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 RDN at 23.70%. As a Financial Services name, RDN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RDN-specific events.
RDN 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. RDN positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RDN alongside the broader basket even when RDN-specific fundamentals are unchanged. Always rebuild the position from current RDN chain quotes before placing a trade.
Frequently asked questions
- What is a collar on RDN?
- A collar on RDN is the collar strategy applied to RDN (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 RDN stock trading near $37.05, the strikes shown on this page are snapped to the nearest listed RDN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RDN 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 RDN collar priced from the end-of-day chain at a 30-day expiry (ATM IV 23.70%), the computed maximum profit is $135.00 per contract and the computed maximum loss is -$265.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RDN collar?
- The breakeven for the RDN collar priced on this page is roughly $37.65 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 RDN market-implied 1-standard-deviation expected move is approximately 6.79%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on RDN?
- Collars on RDN hedge an existing long RDN 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 RDN implied volatility affect this collar?
- RDN ATM IV is at 23.70% with IV rank near 3.37%, 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.