UPS Collar Strategy
UPS (United Parcel Service, Inc.), in the Industrials sector, (Integrated Freight & Logistics industry), listed on NYSE.
United Parcel Service, Inc. provides letter and package delivery, transportation, logistics, and related services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States. The International Package segment provides guaranteed day and time-definite international shipping services in Europe, the Asia Pacific, Canada and Latin America, the Indian sub-continent, the Middle East, and Africa.
UPS (United Parcel Service, Inc.) trades in the Industrials sector, specifically Integrated Freight & Logistics, with a market capitalization of approximately $83.67B, a trailing P/E of 15.94, a beta of 1.05 versus the broader market, a 52-week range of 82-122.41, average daily share volume of 6.3M, a public-listing history dating back to 1999, approximately 241K full-time employees. These structural characteristics shape how UPS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.05 places UPS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. UPS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on UPS?
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 UPS snapshot
As of May 15, 2026, spot at $99.00, ATM IV 27.07%, IV rank 21.04%, expected move 7.76%. The collar on UPS 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 UPS specifically: IV regime affects collar pricing on both sides; compressed UPS IV at 27.07% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 7.76% (roughly $7.68 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 UPS expiries trade a higher absolute premium for lower per-day decay. Position sizing on UPS should anchor to the underlying notional of $99.00 per share and to the trader's directional view on UPS stock.
UPS collar setup
The UPS 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 UPS near $99.00, the first option leg uses a $104.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed UPS 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 UPS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $99.00 | long |
| Sell 1 | Call | $104.00 | $1.75 |
| Buy 1 | Put | $94.00 | $2.24 |
UPS collar risk and reward
- Net Premium / Debit
- -$9,949.00
- Max Profit (per contract)
- $451.00
- Max Loss (per contract)
- -$549.00
- Breakeven(s)
- $99.49
- Risk / Reward Ratio
- 0.821
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.
UPS collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on UPS. 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% | -$549.00 |
| $21.90 | -77.9% | -$549.00 |
| $43.79 | -55.8% | -$549.00 |
| $65.68 | -33.7% | -$549.00 |
| $87.56 | -11.6% | -$549.00 |
| $109.45 | +10.6% | +$451.00 |
| $131.34 | +32.7% | +$451.00 |
| $153.23 | +54.8% | +$451.00 |
| $175.12 | +76.9% | +$451.00 |
| $197.01 | +99.0% | +$451.00 |
When traders use collar on UPS
Collars on UPS hedge an existing long UPS 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.
UPS thesis for this collar
The market-implied 1-standard-deviation range for UPS extends from approximately $91.32 on the downside to $106.68 on the upside. A UPS collar hedges an existing long UPS 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 UPS IV rank near 21.04% 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 UPS at 27.07%. As a Industrials name, UPS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to UPS-specific events.
UPS 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. UPS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move UPS alongside the broader basket even when UPS-specific fundamentals are unchanged. Always rebuild the position from current UPS chain quotes before placing a trade.
Frequently asked questions
- What is a collar on UPS?
- A collar on UPS is the collar strategy applied to UPS (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 UPS stock trading near $99.00, the strikes shown on this page are snapped to the nearest listed UPS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are UPS 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 UPS collar priced from the end-of-day chain at a 30-day expiry (ATM IV 27.07%), the computed maximum profit is $451.00 per contract and the computed maximum loss is -$549.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a UPS collar?
- The breakeven for the UPS collar priced on this page is roughly $99.49 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 UPS market-implied 1-standard-deviation expected move is approximately 7.76%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on UPS?
- Collars on UPS hedge an existing long UPS 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 UPS implied volatility affect this collar?
- UPS ATM IV is at 27.07% with IV rank near 21.04%, 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.