REI Collar Strategy
REI (Ring Energy, Inc.), in the Energy sector, (Oil & Gas Exploration & Production industry), listed on AMEX.
Ring Energy, Inc., an exploration and production company, engages in the acquisition, exploration, development, and production of oil and natural gas in Texas and New Mexico. As of December 31, 2021, the company's proved reserves consisted of approximately 77.8 million barrel of oil equivalent. It also had interests in 18,882 net developed acres and 1,406 net undeveloped acres in Andrews and Gaines counties, Texas; 18,437 net developed acres in Culberson and Reeves counties, Texas; and 13,662 net developed acres and 11,993 net undeveloped acres in Yoakum, Runnels, and Coke Counties, Texas and Lea County, New Mexico. Ring Energy, Inc. primarily sells its oil and natural gas production to end users, marketers, and other purchasers. The company was formerly known as Transglobal Mining Corp. and changed its name to Ring Energy, Inc. in March 2008. Ring Energy, Inc. was incorporated in 2004 and is headquartered in The Woodlands, Texas.
REI (Ring Energy, Inc.) trades in the Energy sector, specifically Oil & Gas Exploration & Production, with a market capitalization of approximately $263.9M, a beta of 0.93 versus the broader market, a 52-week range of 0.72-2, average daily share volume of 5.2M, a public-listing history dating back to 2007, approximately 115 full-time employees. These structural characteristics shape how REI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.93 places REI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a collar on REI?
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 REI snapshot
As of May 15, 2026, spot at $1.35, ATM IV 26.10%, IV rank 0.74%, expected move 7.48%. The collar on REI 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 REI specifically: IV regime affects collar pricing on both sides; compressed REI IV at 26.10% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 7.48% (roughly $0.10 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 REI expiries trade a higher absolute premium for lower per-day decay. Position sizing on REI should anchor to the underlying notional of $1.35 per share and to the trader's directional view on REI stock.
REI collar setup
The REI 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 REI near $1.35, the first option leg uses a $1.42 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed REI 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 REI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $1.35 | long |
| Sell 1 | Call | $1.42 | N/A |
| Buy 1 | Put | $1.28 | N/A |
REI 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.
REI collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on REI. 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 REI
Collars on REI hedge an existing long REI 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.
REI thesis for this collar
The market-implied 1-standard-deviation range for REI extends from approximately $1.25 on the downside to $1.45 on the upside. A REI collar hedges an existing long REI 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 REI IV rank near 0.74% 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 REI at 26.10%. As a Energy name, REI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to REI-specific events.
REI 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. REI positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move REI alongside the broader basket even when REI-specific fundamentals are unchanged. Always rebuild the position from current REI chain quotes before placing a trade.
Frequently asked questions
- What is a collar on REI?
- A collar on REI is the collar strategy applied to REI (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 REI stock trading near $1.35, the strikes shown on this page are snapped to the nearest listed REI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are REI 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 REI collar priced from the end-of-day chain at a 30-day expiry (ATM IV 26.10%), 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 REI collar?
- The breakeven for the REI 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 REI market-implied 1-standard-deviation expected move is approximately 7.48%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on REI?
- Collars on REI hedge an existing long REI 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 REI implied volatility affect this collar?
- REI ATM IV is at 26.10% with IV rank near 0.74%, 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.