WTS Collar Strategy
WTS (Watts Water Technologies, Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Watts Water Technologies, Inc. is a global enterprise that creates, produces, and distributes a comprehensive range of products and systems designed to regulate and optimize the movement and conservation of liquids and energy within and around both commercial and residential structures. Their operations span across the Americas, Europe, Asia-Pacific, the Middle East, and Africa. Their core offerings include various residential and commercial fluid control devices, such as backflow prevention devices, water pressure regulation units, safety valves for temperature and pressure, and thermostatic mixing valves. Additionally, Watts manufactures heating, ventilation, air conditioning (HVAC), and gas-related equipment. This extensive category encompasses boilers, water heating units, customized heating and hot water solutions, and both hydronic and electric underfloor radiant heating systems. They also supply hydronic pump assemblies for boiler producers and alternative energy control systems, alongside flexible stainless steel connectors for natural and LP gas used in commercial kitchens and homes.
WTS (Watts Water Technologies, Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $12.90B, a trailing P/E of 33.72, a beta of 1.13 versus the broader market, a 52-week range of 260-394.54, average daily share volume of 341K, a public-listing history dating back to 1986, approximately 6K full-time employees. These structural characteristics shape how WTS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.13 places WTS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. WTS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a collar on WTS?
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.
WTS snapshot
As of August 14, 2026, spot at $383.80, ATM IV 23.50%, IV rank 2.15%, expected move 6.74%. The collar on WTS below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.
Why this collar structure on WTS specifically: IV regime affects collar pricing on both sides; compressed WTS IV at 23.50% typically pushes the short call premium to roughly offset the long put cost, with a market-implied 1-standard-deviation move of approximately 6.74% (roughly $25.86 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated WTS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WTS should anchor to the underlying notional of $383.80 per share and to the trader's directional view on WTS stock.
WTS collar setup
The WTS collar below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With WTS at $383.80 on that close, the first option leg uses a $400.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WTS chain at a 35-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 WTS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $383.80 | long |
| Sell 1 | Call | $400.00 | $5.25 |
| Buy 1 | Put | $360.00 | $3.40 |
WTS collar risk and reward
- Net Premium / Debit
- -$38,195.00
- Max Profit (per contract)
- $1,805.00
- Max Loss (per contract)
- -$2,195.00
- Breakeven(s)
- $381.95
- Risk / Reward Ratio
- 0.822
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.
WTS collar payoff curve
Modeled P&L at expiration across a range of underlying prices for the collar on WTS. 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% | -$2,195.00 |
| $84.87 | -77.9% | -$2,195.00 |
| $169.73 | -55.8% | -$2,195.00 |
| $254.59 | -33.7% | -$2,195.00 |
| $339.45 | -11.6% | -$2,195.00 |
| $424.31 | +10.6% | +$1,805.00 |
| $509.17 | +32.7% | +$1,805.00 |
| $594.02 | +54.8% | +$1,805.00 |
| $678.88 | +76.9% | +$1,805.00 |
| $763.74 | +99.0% | +$1,805.00 |
When traders use collar on WTS
Collars on WTS hedge an existing long WTS 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.
WTS thesis for this collar
The market-implied 1-standard-deviation range for WTS extends from approximately $357.94 on the downside to $409.66 on the upside. A WTS collar hedges an existing long WTS 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 WTS IV rank near 2.15% 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 WTS at 23.50%. As a Industrials name, WTS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WTS-specific events.
WTS 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. WTS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WTS alongside the broader basket even when WTS-specific fundamentals are unchanged. Always rebuild the position from current WTS chain quotes before placing a trade.
Frequently asked questions
- What is a collar on WTS?
- A collar on WTS is the collar strategy applied to WTS (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 WTS stock at $383.80 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed WTS chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are WTS 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 WTS collar priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 23.50%), the computed maximum profit is $1,805.00 per contract and the computed maximum loss is -$2,195.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WTS collar?
- The breakeven for the WTS collar priced on this page is roughly $381.95 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The WTS market-implied 1-standard-deviation expected move in the same options snapshot is approximately 6.74%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a collar on WTS?
- Collars on WTS hedge an existing long WTS 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 WTS implied volatility affect this collar?
- WTS ATM IV is at 23.50% with IV rank near 2.15%, 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.