Author : Adam Warner
Publisher : FT Press
ISBN 13 : 0132842599
Total Pages : 43 pages
Book Rating : 4.1/5 (328 download)
Book Synopsis Trading Option Collars by : Adam Warner
Download or read book Trading Option Collars written by Adam Warner and published by FT Press. This book was released on 2011-07-28 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the eBook version of the printed book. The basic option strategy known as a “collar” has achieved some degree of popularity in recent years. Investors generally use it in a simple fashion. They own a stock. Stock rallies. They want to lock in some gain but still participate in more upside. So they slap on a simple collar. Generally, that involves buying a modestly OTM put and shorting a modestly OTM call in quantities exactly equal to the stock they already own. And generally at prices such that the premium received on the call "pays for" the put. And that's it. But there's so much more. In this short piece, the author expands on this basic option trading strategy. How about playing with the ratios of the options to the stock? Or to themselves? How about we do everything in reverse: Short the stock and protect it with long OTM calls....and "pay for" those calls with short OTM puts? How do you manage any of these positions? What is the cost of capital on all of this? The author covers all of these possibilities.