TGT Collar Strategy
TGT (Target Corporation), in the Consumer Defensive sector, (Discount Stores industry), listed on NYSE.
Target Corporation operates as a general merchandise retailer in the United States. The company offers food assortments, including perishables, dry grocery, dairy, and frozen items; apparel, accessories, home décor products, electronics, toys, seasonal offerings, food, and other merchandise; and beauty and household essentials. It also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. The company sells its products through its stores; and digital channels, including Target.com. As of March 09, 2022, the company operated approximately 2,000 stores. Target Corporation was incorporated in 1902 and is headquartered in Minneapolis, Minnesota.
TGT (Target Corporation) trades in the Consumer Defensive sector, specifically Discount Stores, with a market capitalization of approximately $55.01B, a trailing P/E of 14.85, a beta of 1.01 versus the broader market, a 52-week range of 83.44-133.1, average daily share volume of 5.6M, a public-listing history dating back to 1967, approximately 440K full-time employees. These structural characteristics shape how TGT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.01 places TGT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. TGT pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on TGT?
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 TGT snapshot
As of May 15, 2026, spot at $120.71, ATM IV 43.44%, IV rank 53.84%, expected move 12.46%. The collar on TGT 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 28-day expiry.
Why this collar structure on TGT specifically: IV regime affects collar pricing on both sides; mid-range TGT IV at 43.44% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 12.46% (roughly $15.03 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated TGT expiries trade a higher absolute premium for lower per-day decay. Position sizing on TGT should anchor to the underlying notional of $120.71 per share and to the trader's directional view on TGT stock.
TGT collar setup
The TGT 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 TGT near $120.71, the first option leg uses a $127.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TGT chain at a 28-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 TGT shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $120.71 | long |
| Sell 1 | Call | $127.00 | $3.48 |
| Buy 1 | Put | $115.00 | $3.35 |
TGT collar risk and reward
- Net Premium / Debit
- -$12,058.50
- Max Profit (per contract)
- $641.50
- Max Loss (per contract)
- -$558.50
- Breakeven(s)
- $120.59
- Risk / Reward Ratio
- 1.149
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.
TGT collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on TGT. 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% | -$558.50 |
| $26.70 | -77.9% | -$558.50 |
| $53.39 | -55.8% | -$558.50 |
| $80.08 | -33.7% | -$558.50 |
| $106.76 | -11.6% | -$558.50 |
| $133.45 | +10.6% | +$641.50 |
| $160.14 | +32.7% | +$641.50 |
| $186.83 | +54.8% | +$641.50 |
| $213.52 | +76.9% | +$641.50 |
| $240.21 | +99.0% | +$641.50 |
When traders use collar on TGT
Collars on TGT hedge an existing long TGT 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.
TGT thesis for this collar
The market-implied 1-standard-deviation range for TGT extends from approximately $105.68 on the downside to $135.74 on the upside. A TGT collar hedges an existing long TGT 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 TGT IV rank near 53.84% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on TGT should anchor more to the directional view and the expected-move geometry. As a Consumer Defensive name, TGT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TGT-specific events.
TGT 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. TGT positions also carry Consumer Defensive sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TGT alongside the broader basket even when TGT-specific fundamentals are unchanged. Always rebuild the position from current TGT chain quotes before placing a trade.
Frequently asked questions
- What is a collar on TGT?
- A collar on TGT is the collar strategy applied to TGT (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 TGT stock trading near $120.71, the strikes shown on this page are snapped to the nearest listed TGT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are TGT 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 TGT collar priced from the end-of-day chain at a 30-day expiry (ATM IV 43.44%), the computed maximum profit is $641.50 per contract and the computed maximum loss is -$558.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TGT collar?
- The breakeven for the TGT collar priced on this page is roughly $120.59 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 TGT market-implied 1-standard-deviation expected move is approximately 12.46%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on TGT?
- Collars on TGT hedge an existing long TGT 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 TGT implied volatility affect this collar?
- TGT ATM IV is at 43.44% with IV rank near 53.84%, 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.