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Key Point in Collar Strategy

Thursday, October 25, 2007
Filed Under Intermediate Options Trading 

Key Point – The collar strategy allows for a limited but continued capital appreciation of a long stock position while providing for a limited, fixed downside exposure. The position is very inexpensive to initiate due to the offsetting premiums of the long (purchased) put and short (sold) call. The collar is an excellent protective strategy…click to read more.

Can The Collar Strategy Be Leaned?

Wednesday, October 24, 2007
Filed Under Intermediate Options Trading 

Like other strategies, the collar can be leaned toward the investor’s perception of the stock’s direction and strength. Let’s look at the potential leans that can be taken. Say that you have a very strong feeling the XYZ is going to go up. Instead of buying a put and selling a call with strikes that…click to read more.

Let’s take a look at how the strategy works with this position. For the sake of our illustration and to make our calculations easy let’s establish the collar using the December 27.5 put and the December 30 call, with both trading at $1.00. Remember our stock price was $28.50. The cost of the collar will…click to read more.

The Collar Strategy

Monday, October 22, 2007
Filed Under Intermediate Options Trading 

THE COLLAR STRATEGY Another protective strategy that allows for some upside capital gain while providing maximum down side protection is the collar. The collar is a combination of the covered call and protective put strategies. The collar uses a long put position in coordination with a short call position along with a long stock position.…click to read more.

NOTES ON GM General Motors Protective Put 1. After trading in a tight range for a considerable period of time with low volatility, GM’s volatility spiked in early December 2003 and the stock gapped open considerably higher, followed by another breakout gap opening several days later. 2. This second gap opening forced the stock up…click to read more.

NOTES ON WAL-MART (WMT) Protective Put 1. In mid-November 2003, Walmart opens down $1.50 to $56.25 and proceeds to trade down from there breaking the lower end of an uptrend channel. 2. Wal-mart then has a quick consolidation in mid-November around the $54.50- $55.00 level followed by a small technical rebound back to around $56.25.…click to read more.

NOTES ON AMGEN (AMGN) Protective Put 1. With the use of Technical Analysis, Amgen is identified to be poised to break down through a technical support as determined by a line drawn through three bottoms points, occurring in January 2002. 2. Then, in May 2002, the stock breaks down below the support line indicating an…click to read more.

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