Collar Options Trading Strategy (Best Guide w/ Examples)

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The collar options strategy consists of selling a call and buying a put against 100 shares of stock. The strategy aims to reduce the loss potential on the long stock position without spending too much for protection. This is accomplished by financing the cost of buying the put by selling a call option as well.

It’s possible to construct a collar in a way that guarantees profits at expiration (if you own a profitable long stock position).

In this video, you’ll learn:

1. What are the characteristics of the collar options strategy?
2. What does the expiration risk graph look like for a collar position?
3. How do collar positions perform when the stock prices moves up, down, or sideways?

Also, you’ll see real trade examples of collars in action. As a result, you’ll know exactly what to expect from a married put before trading one.


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John Handal says:

How do you decide what expiration date to choose? and how do you decide the strikes? Could you place the protective put at later expiration date, i.e., three or four month and sell the call earlier expiration date, i.e., one month ? Thank you for the video. I will visit this website in two or three days to read your reply.

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