Protective Put / Collar Calculator

A protective put insures a stock you own by buying a put option, guaranteeing you can sell at the put's strike no matter how far the stock falls. A collar goes a step further, selling a call to help pay for that insurance, at the cost of capping how much upside you can keep.

This calculator shows both the downside floor and, if you add the financing call, the upside cap, plus the net cost of the whole structure.

How does this calculator work?

Enter your cost basis, the stock's current price, and how many contracts (each covers 100 shares).

Enter the protective put's strike and premium. This sets your floor: the price you can always sell at, no matter how low the stock falls.

Optionally add a financing call. Selling a call at a strike above the current price collects premium to help offset the put's cost, but caps your maximum gain at that strike.

A collar is a covered call with a protective put added beneath it, so the premium from the call helps fund the floor the put provides, much as a cash-secured put collects premium on the other side of a position. The combined structure is easiest to read on a full payoff diagram, and sizing it against the shares you hold follows the same risk-per-trade discipline as any other trade.

Worked example

You own 100 shares at a $50 cost basis, currently worth $50. You buy the $47 put for $1.20, and sell the $55 call for $1.00 to help pay for it.

Net cost of the options

$0.20/share

Breakeven

$50.20

Floor (max loss)

$47.00 ($320 total loss)

Cap (max profit)

$55.00 ($480 total profit)

How the numbers work

The put costs $1.20/share, but selling the call brings in $1.00/share, so the whole structure costs just $0.20/share net, far cheaper than buying the put alone.

No matter how far the stock falls, you can always sell at $47, capping your total loss at $320 (the $3/share drop from your cost basis to the put strike, plus the $0.20/share net option cost, times 100 shares).

If the stock rises above $55, your shares get called away there, capping your total gain at $480. Above $55, you don't participate in any further upside.

A collar is a defined-risk, defined-reward range around your stock position: it removes both the worst-case and best-case outcomes in exchange for lowering (or eliminating) the cost of downside protection. It suits investors who want to lock in a gain or limit a loss on a position they're not ready to sell outright.