RS Collar Strategy
RS (Reliance Steel & Aluminum Co.), in the Basic Materials sector, (Steel industry), listed on NYSE.
Reliance Steel & Aluminum Co. operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It also distributes non-ferrous metals products and tubular building products; and manufactures specialty extruded metals, fabricated parts, and welded components. As of December 31, 2021, the company operated a network of approximately 315 locations in 40 states in the United States and 13 in other countries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was founded in 1939 and is headquartered in Los Angeles, California.
RS (Reliance Steel & Aluminum Co.) trades in the Basic Materials sector, specifically Steel, with a market capitalization of approximately $18.83B, a trailing P/E of 23.63, a beta of 0.95 versus the broader market, a 52-week range of 260.31-381, average daily share volume of 359K, a public-listing history dating back to 1994, approximately 16K full-time employees. These structural characteristics shape how RS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.95 places RS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. RS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on RS?
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 RS snapshot
As of May 15, 2026, spot at $362.63, ATM IV 27.30%, IV rank 37.02%, expected move 7.83%. The collar on RS 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 RS specifically: IV regime affects collar pricing on both sides; mid-range RS IV at 27.30% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 7.83% (roughly $28.38 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 RS expiries trade a higher absolute premium for lower per-day decay. Position sizing on RS should anchor to the underlying notional of $362.63 per share and to the trader's directional view on RS stock.
RS collar setup
The RS 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 RS near $362.63, the first option leg uses a $380.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RS 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 RS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $362.63 | long |
| Sell 1 | Call | $380.00 | $4.05 |
| Buy 1 | Put | $340.00 | $4.60 |
RS collar risk and reward
- Net Premium / Debit
- -$36,318.00
- Max Profit (per contract)
- $1,682.00
- Max Loss (per contract)
- -$2,318.00
- Breakeven(s)
- $363.18
- Risk / Reward Ratio
- 0.726
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.
RS collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on RS. 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% | -$2,318.00 |
| $80.19 | -77.9% | -$2,318.00 |
| $160.37 | -55.8% | -$2,318.00 |
| $240.55 | -33.7% | -$2,318.00 |
| $320.72 | -11.6% | -$2,318.00 |
| $400.90 | +10.6% | +$1,682.00 |
| $481.08 | +32.7% | +$1,682.00 |
| $561.26 | +54.8% | +$1,682.00 |
| $641.44 | +76.9% | +$1,682.00 |
| $721.62 | +99.0% | +$1,682.00 |
When traders use collar on RS
Collars on RS hedge an existing long RS 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.
RS thesis for this collar
The market-implied 1-standard-deviation range for RS extends from approximately $334.25 on the downside to $391.01 on the upside. A RS collar hedges an existing long RS 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 RS IV rank near 37.02% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on RS should anchor more to the directional view and the expected-move geometry. As a Basic Materials name, RS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RS-specific events.
RS 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. RS positions also carry Basic Materials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RS alongside the broader basket even when RS-specific fundamentals are unchanged. Always rebuild the position from current RS chain quotes before placing a trade.
Frequently asked questions
- What is a collar on RS?
- A collar on RS is the collar strategy applied to RS (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 RS stock trading near $362.63, the strikes shown on this page are snapped to the nearest listed RS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RS 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 RS collar priced from the end-of-day chain at a 30-day expiry (ATM IV 27.30%), the computed maximum profit is $1,682.00 per contract and the computed maximum loss is -$2,318.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RS collar?
- The breakeven for the RS collar priced on this page is roughly $363.18 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 RS market-implied 1-standard-deviation expected move is approximately 7.83%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on RS?
- Collars on RS hedge an existing long RS 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 RS implied volatility affect this collar?
- RS ATM IV is at 27.30% with IV rank near 37.02%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.