UNP Collar Strategy
UNP (Union Pacific Corporation), in the Industrials sector, (Railroads industry), listed on NYSE.
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. The company offers transportation services for grain and grain products, fertilizers, food and refrigerated products, and coal and renewables to grain processors, animal feeders, ethanol producers, and other agricultural users; petroleum, and liquid petroleum gases; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers. As of December 31, 2021, its rail network included 32,452 route miles connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways. The company was founded in 1862 and is headquartered in Omaha, Nebraska.
UNP (Union Pacific Corporation) trades in the Industrials sector, specifically Railroads, with a market capitalization of approximately $157.13B, a trailing P/E of 21.76, a beta of 0.99 versus the broader market, a 52-week range of 210.84-274.79, average daily share volume of 3.0M, a public-listing history dating back to 1980, approximately 30K full-time employees. These structural characteristics shape how UNP stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.99 places UNP roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. UNP pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on UNP?
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 UNP snapshot
As of May 15, 2026, spot at $270.29, ATM IV 25.06%, IV rank 45.31%, expected move 7.19%. The collar on UNP 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 UNP specifically: IV regime affects collar pricing on both sides; mid-range UNP IV at 25.06% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 7.19% (roughly $19.42 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 UNP expiries trade a higher absolute premium for lower per-day decay. Position sizing on UNP should anchor to the underlying notional of $270.29 per share and to the trader's directional view on UNP stock.
UNP collar setup
The UNP 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 UNP near $270.29, the first option leg uses a $285.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed UNP 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 UNP shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $270.29 | long |
| Sell 1 | Call | $285.00 | $1.93 |
| Buy 1 | Put | $255.00 | $2.65 |
UNP collar risk and reward
- Net Premium / Debit
- -$27,101.50
- Max Profit (per contract)
- $1,398.50
- Max Loss (per contract)
- -$1,601.50
- Breakeven(s)
- $271.02
- Risk / Reward Ratio
- 0.873
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.
UNP collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on UNP. 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% | -$1,601.50 |
| $59.77 | -77.9% | -$1,601.50 |
| $119.53 | -55.8% | -$1,601.50 |
| $179.29 | -33.7% | -$1,601.50 |
| $239.06 | -11.6% | -$1,601.50 |
| $298.82 | +10.6% | +$1,398.50 |
| $358.58 | +32.7% | +$1,398.50 |
| $418.34 | +54.8% | +$1,398.50 |
| $478.10 | +76.9% | +$1,398.50 |
| $537.86 | +99.0% | +$1,398.50 |
When traders use collar on UNP
Collars on UNP hedge an existing long UNP 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.
UNP thesis for this collar
The market-implied 1-standard-deviation range for UNP extends from approximately $250.87 on the downside to $289.71 on the upside. A UNP collar hedges an existing long UNP 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 UNP IV rank near 45.31% is mid-range against its 1-year distribution, so the IV signal is neutral; the collar thesis on UNP should anchor more to the directional view and the expected-move geometry. As a Industrials name, UNP options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to UNP-specific events.
UNP 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. UNP positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move UNP alongside the broader basket even when UNP-specific fundamentals are unchanged. Always rebuild the position from current UNP chain quotes before placing a trade.
Frequently asked questions
- What is a collar on UNP?
- A collar on UNP is the collar strategy applied to UNP (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 UNP stock trading near $270.29, the strikes shown on this page are snapped to the nearest listed UNP chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are UNP 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 UNP collar priced from the end-of-day chain at a 30-day expiry (ATM IV 25.06%), the computed maximum profit is $1,398.50 per contract and the computed maximum loss is -$1,601.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a UNP collar?
- The breakeven for the UNP collar priced on this page is roughly $271.02 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 UNP market-implied 1-standard-deviation expected move is approximately 7.19%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on UNP?
- Collars on UNP hedge an existing long UNP 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 UNP implied volatility affect this collar?
- UNP ATM IV is at 25.06% with IV rank near 45.31%, 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.