WMS Collar Strategy
WMS (Advanced Drainage Systems, Inc.), in the Industrials sector, (Construction industry), listed on NYSE.
Advanced Drainage Systems, Inc., established in Hilliard, Ohio in 1966, is a leading provider of innovative water management solutions. The company specializes in the design, manufacturing, and global distribution of thermoplastic corrugated pipes and related drainage products, primarily targeting the underground construction and infrastructure sectors across the United States, Canada, Mexico, and other international territories. Its operations are structured across four key segments: Pipe, International, Infiltrator, and Allied Products & Other. ADS offers a wide array of products, including single, double, and triple-wall corrugated pipes made from polypropylene and polyethylene. Beyond basic piping, their extensive catalog features sophisticated water management systems such as plastic leachfield chambers, EZflow synthetic aggregate bundles, advanced mechanical aeration wastewater solutions, septic tanks and accessories, and integrated treatment and dispersal units. Furthermore, the company supplies allied products like storm retention, detention, and septic chambers, polyvinyl chloride drainage structures, various fittings, and water quality filters and separators.
WMS (Advanced Drainage Systems, Inc.) trades in the Industrials sector, specifically Construction, with a market capitalization of approximately $11.83B, a trailing P/E of 28.19, a beta of 1.29 versus the broader market, a 52-week range of 109.63-179.315, average daily share volume of 973K, a public-listing history dating back to 2014, approximately 6K full-time employees. These structural characteristics shape how WMS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.29 places WMS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. WMS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on WMS?
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 WMS snapshot
As of June 29, 2026, spot at $154.27, ATM IV 34.20%, IV rank 12.98%, expected move 9.80%. The collar on WMS 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 18-day expiry.
Why this collar structure on WMS specifically: IV regime affects collar pricing on both sides; compressed WMS IV at 34.20% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 9.80% (roughly $15.13 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated WMS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WMS should anchor to the underlying notional of $154.27 per share and to the trader's directional view on WMS stock.
WMS collar setup
The WMS 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 WMS near $154.27, the first option leg uses a $160.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WMS chain at a 18-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 WMS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $154.27 | long |
| Sell 1 | Call | $160.00 | $2.25 |
| Buy 1 | Put | $145.00 | $1.75 |
WMS collar risk and reward
- Net Premium / Debit
- -$15,377.00
- Max Profit (per contract)
- $623.00
- Max Loss (per contract)
- -$877.00
- Breakeven(s)
- $153.77
- Risk / Reward Ratio
- 0.710
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.
WMS collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on WMS. 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% | -$877.00 |
| $34.12 | -77.9% | -$877.00 |
| $68.23 | -55.8% | -$877.00 |
| $102.34 | -33.7% | -$877.00 |
| $136.45 | -11.6% | -$877.00 |
| $170.55 | +10.6% | +$623.00 |
| $204.66 | +32.7% | +$623.00 |
| $238.77 | +54.8% | +$623.00 |
| $272.88 | +76.9% | +$623.00 |
| $306.99 | +99.0% | +$623.00 |
When traders use collar on WMS
Collars on WMS hedge an existing long WMS 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.
WMS thesis for this collar
The market-implied 1-standard-deviation range for WMS extends from approximately $139.14 on the downside to $169.40 on the upside. A WMS collar hedges an existing long WMS 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 WMS IV rank near 12.98% 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 WMS at 34.20%. As a Industrials name, WMS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WMS-specific events.
WMS 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. WMS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WMS alongside the broader basket even when WMS-specific fundamentals are unchanged. Always rebuild the position from current WMS chain quotes before placing a trade.
Frequently asked questions
- What is a collar on WMS?
- A collar on WMS is the collar strategy applied to WMS (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 WMS stock trading near $154.27, the strikes shown on this page are snapped to the nearest listed WMS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WMS 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 WMS collar priced from the end-of-day chain at a 30-day expiry (ATM IV 34.20%), the computed maximum profit is $623.00 per contract and the computed maximum loss is -$877.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WMS collar?
- The breakeven for the WMS collar priced on this page is roughly $153.77 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 WMS market-implied 1-standard-deviation expected move is approximately 9.80%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on WMS?
- Collars on WMS hedge an existing long WMS 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 WMS implied volatility affect this collar?
- WMS ATM IV is at 34.20% with IV rank near 12.98%, 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.