RLJ Collar Strategy
RLJ (RLJ Lodging Trust), in the Real Estate sector, (REIT - Hotel & Motel industry), listed on NYSE.
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio consists of 103 hotels with approximately 22,570 rooms, located in 23 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.
RLJ (RLJ Lodging Trust) trades in the Real Estate sector, specifically REIT - Hotel & Motel, with a market capitalization of approximately $1.35B, a trailing P/E of 53.53, a beta of 1.10 versus the broader market, a 52-week range of 6.54-9, average daily share volume of 2.5M, a public-listing history dating back to 2011, approximately 73 full-time employees. These structural characteristics shape how RLJ stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.10 places RLJ roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 53.53 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. RLJ pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on RLJ?
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 RLJ snapshot
As of May 15, 2026, spot at $8.93, ATM IV 42.20%, IV rank 8.33%, expected move 12.10%. The collar on RLJ 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 RLJ specifically: IV regime affects collar pricing on both sides; compressed RLJ IV at 42.20% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 12.10% (roughly $1.08 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 RLJ expiries trade a higher absolute premium for lower per-day decay. Position sizing on RLJ should anchor to the underlying notional of $8.93 per share and to the trader's directional view on RLJ stock.
RLJ collar setup
The RLJ 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 RLJ near $8.93, the first option leg uses a $9.38 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RLJ 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 RLJ shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $8.93 | long |
| Sell 1 | Call | $9.38 | N/A |
| Buy 1 | Put | $8.48 | N/A |
RLJ 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.
RLJ collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on RLJ. 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 RLJ
Collars on RLJ hedge an existing long RLJ 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.
RLJ thesis for this collar
The market-implied 1-standard-deviation range for RLJ extends from approximately $7.85 on the downside to $10.01 on the upside. A RLJ collar hedges an existing long RLJ 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 RLJ IV rank near 8.33% 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 RLJ at 42.20%. As a Real Estate name, RLJ options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RLJ-specific events.
RLJ 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. RLJ positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RLJ alongside the broader basket even when RLJ-specific fundamentals are unchanged. Always rebuild the position from current RLJ chain quotes before placing a trade.
Frequently asked questions
- What is a collar on RLJ?
- A collar on RLJ is the collar strategy applied to RLJ (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 RLJ stock trading near $8.93, the strikes shown on this page are snapped to the nearest listed RLJ chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RLJ 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 RLJ collar priced from the end-of-day chain at a 30-day expiry (ATM IV 42.20%), 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 RLJ collar?
- The breakeven for the RLJ 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 RLJ market-implied 1-standard-deviation expected move is approximately 12.10%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on RLJ?
- Collars on RLJ hedge an existing long RLJ 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 RLJ implied volatility affect this collar?
- RLJ ATM IV is at 42.20% with IV rank near 8.33%, 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.