TDG Collar Strategy
TDG (TransDigm Group Incorporated), in the Industrials sector, (Aerospace & Defense industry), listed on NYSE.
TransDigm Group Incorporated is a global aerospace enterprise specializing in the development, manufacturing, and distribution of a wide array of aircraft components. Operating across the United States and internationally, its business is structured around three distinct divisions. The Power & Control division focuses on critical systems, providing solutions such as electromechanical actuators and control mechanisms, engine ignition and related technologies, precision pumps and valves, power regulation equipment, specialized electric motors and generators, energy storage units, data communication and power management systems, diverse sensors, switching gear, and material handling equipment including hoists and cargo systems. This segment caters to a broad clientele, including engine and power system manufacturers, airlines, independent maintenance providers, governmental defense agencies, and aircraft repair facilities. The Airframe segment delivers structural and interior components. Its offerings encompass custom latching and locking mechanisms, structural rods and connectors, resilient sealing solutions, cockpit safety and display units, advanced audio, radio, and antenna technologies, restroom facilities, passenger safety restraints, bespoke interior panels and associated parts, thermal management and insulation products, illumination and control systems, and parachutes.
TDG (TransDigm Group Incorporated) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $74.09B, a trailing P/E of 38.11, a beta of 0.90 versus the broader market, a 52-week range of 1123.61-1623.83, average daily share volume of 405K, a public-listing history dating back to 2006, approximately 17K full-time employees. These structural characteristics shape how TDG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.90 places TDG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 38.11 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. TDG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on TDG?
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 TDG snapshot
As of June 30, 2026, spot at $1,323.26, ATM IV 29.10%, IV rank 32.59%, expected move 8.34%. The collar on TDG 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 17-day expiry.
Why this collar structure on TDG specifically: IV regime affects collar pricing on both sides; mid-range TDG IV at 29.10% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 8.34% (roughly $110.40 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated TDG expiries trade a higher absolute premium for lower per-day decay. Position sizing on TDG should anchor to the underlying notional of $1,323.26 per share and to the trader's directional view on TDG stock.
TDG collar setup
The TDG 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 TDG near $1,323.26, the first option leg uses a $1,380.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TDG chain at a 17-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 TDG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $1,323.26 | long |
| Sell 1 | Call | $1,380.00 | $12.15 |
| Buy 1 | Put | $1,260.00 | $10.65 |
TDG collar risk and reward
- Net Premium / Debit
- -$132,176.00
- Max Profit (per contract)
- $5,824.00
- Max Loss (per contract)
- -$6,176.00
- Breakeven(s)
- $1,321.76
- Risk / Reward Ratio
- 0.943
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.
TDG collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on TDG. 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% | -$6,176.00 |
| $292.59 | -77.9% | -$6,176.00 |
| $585.17 | -55.8% | -$6,176.00 |
| $877.75 | -33.7% | -$6,176.00 |
| $1,170.33 | -11.6% | -$6,176.00 |
| $1,462.90 | +10.6% | +$5,824.00 |
| $1,755.48 | +32.7% | +$5,824.00 |
| $2,048.06 | +54.8% | +$5,824.00 |
| $2,340.64 | +76.9% | +$5,824.00 |
| $2,633.22 | +99.0% | +$5,824.00 |
When traders use collar on TDG
Collars on TDG hedge an existing long TDG 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.
TDG thesis for this collar
The market-implied 1-standard-deviation range for TDG extends from approximately $1,212.86 on the downside to $1,433.66 on the upside. A TDG collar hedges an existing long TDG 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 TDG IV rank near 32.59% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on TDG should anchor more to the directional view and the expected-move geometry. As a Industrials name, TDG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TDG-specific events.
TDG 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. TDG positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TDG alongside the broader basket even when TDG-specific fundamentals are unchanged. Always rebuild the position from current TDG chain quotes before placing a trade.
Frequently asked questions
- What is a collar on TDG?
- A collar on TDG is the collar strategy applied to TDG (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 TDG stock trading near $1,323.26, the strikes shown on this page are snapped to the nearest listed TDG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TDG 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 TDG collar priced from the end-of-day chain at a 30-day expiry (ATM IV 29.10%), the computed maximum profit is $5,824.00 per contract and the computed maximum loss is -$6,176.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TDG collar?
- The breakeven for the TDG collar priced on this page is roughly $1,321.76 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 TDG market-implied 1-standard-deviation expected move is approximately 8.34%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on TDG?
- Collars on TDG hedge an existing long TDG 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 TDG implied volatility affect this collar?
- TDG ATM IV is at 29.10% with IV rank near 32.59%, 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.