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Congratulations. I’ve watched 10 videos on using a collar. Two of them, including yours, were on topic, coherent, succinct and useful. The other eight were not … and I’m stating that diplomatically. ❤
Explanations are amazing...Do you have consolidated file wherein all presentation/ strategies with graph are saved?? This will really help us a lot...Thanks
A question. If the stock price has been increasing and the current price of the stock is well above the protective put strike price, Is it a good idea to sell the old protective put and buy a new protective put with a strike price much closer to the current stock price, thereby locking in the capital gains? Thanks a ton!
Thanks for the amazing video. In the examples shown, The call price premium is higher than the put price premium. If I am ready to take a debit on the premiums, is it a good strategy to make the strike price of the call even higher? This would increase my overall profit potential. But are there any other downsides of that? Thanks.
The downside is you have a higher maximum loss since you're collecting less of a premium on that short call. Because of this, you can adjust your maximum loss and maximum profit granularly depending on how bullish you are. A rule of thumb that you can think about is setting your short call where you think the underlying will be at expiration, and setting your long put to your personal risk tolerance.
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.
John, Choosing expirations depends entirely on how long you want protection for. If you wanted protection on your long stock through an upcoming earnings report, maybe you use the options that expire immediately after the report. You could definitely buy a longer-dated put option and sell more near-term calls against them, but you will likely pay premium to set the trade up since that short call won't finance the long put nearly as much as a longer-term call. With that said, you can always continue selling short-term call options after each call option expires, which will collect more premium as you continue to sell calls. -Chris
Thank you. Very helpful. But I got slightly confused for a second - at minute 9, in the table, shouldn't the headings for put price and call price be the opposite?
is it almost the same as to buy a call (instead of buy direct stock/shares), then when profitable LOCK in your profits by Shorting the Call and Buying the Put for sometime....
If you buy a call below the current market, and sell a call above the current market for the same price, wouldn't you break even no matter how much the market goes beyond one of your two strikes?
You're describing a bullish call spread (AKA call debit spread). If the underlying is above both strikes at expiration, you'd get your max profit ((short strike - long strike - debit paid) x 100). But you'd experience your max loss (the debit you paid) if the underlying is below both strikes. That's because both options would expire worthless, and the premium you paid for the ITM call you bought is greater than the premium you collected from selling the OTM strike. Hope that makes sense.
you are basically long on the stock and not hedging/ providing downside risk if the stock value goes down... You will be assigned the shares if stock price is below your target and your call will endup worthless.
1) Click on the ASK price on the stock price (top of platform) 2) Click on the BID price of a call option on the same stock (you pick the expiration and strike) 3) Click on the ASK price of a put option on the same stock (you pick the expiration and strike) If you already own 100 shares, skip step #1. You need to match up the quantities of the call and put based on how many shares you have. You need 1x call and put for every 100 shares you own. If you own 300 shares, you can short 3x calls and buy 3x puts.
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
if the stock goes down the put value goes up right? why dont we see that here ?
Congratulations. I’ve watched 10 videos on using a collar. Two of them, including yours, were on topic, coherent, succinct and useful. The other eight were not … and I’m stating that diplomatically. ❤
I am so glad that I discovered your channel. Your videos are great. Thanks for making them.
Thanks for the nice comment! I'm happy the videos are helping.
There is a typo in the slides around 8:31. The put price and call price column headers should be swapped. Earlier table has call price first
Is there any reason to collar it in the money to anticipate a pull back?
Explanations are amazing...Do you have consolidated file wherein all presentation/ strategies with graph are saved?? This will really help us a lot...Thanks
I appreciate you for uploading this video. This was very helpful. Thanks
You're welcome! Thanks for watching.
A question. If the stock price has been increasing and the current price of the stock is well above the protective put strike price, Is it a good idea to sell the old protective put and buy a new protective put with a strike price much closer to the current stock price, thereby locking in the capital gains? Thanks a ton!
Yes, if you can sell a call to pay for the put
Reduce risk
Thank you, very helpful
Hey buddy! Can you do a zero-cost collar example? Thank you in advance
Thanks for the amazing video. In the examples shown, The call price premium is higher than the put price premium. If I am ready to take a debit on the premiums, is it a good strategy to make the strike price of the call even higher? This would increase my overall profit potential. But are there any other downsides of that? Thanks.
The downside is you have a higher maximum loss since you're collecting less of a premium on that short call. Because of this, you can adjust your maximum loss and maximum profit granularly depending on how bullish you are.
A rule of thumb that you can think about is setting your short call where you think the underlying will be at expiration, and setting your long put to your personal risk tolerance.
is there an error with the figures use at 8:20? Buy put option (strike $145) @ $5? Shouldn't it be $10.50?
Thank you very much for a very detailed explanation.
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.
John,
Choosing expirations depends entirely on how long you want protection for. If you wanted protection on your long stock through an upcoming earnings report, maybe you use the options that expire immediately after the report.
You could definitely buy a longer-dated put option and sell more near-term calls against them, but you will likely pay premium to set the trade up since that short call won't finance the long put nearly as much as a longer-term call.
With that said, you can always continue selling short-term call options after each call option expires, which will collect more premium as you continue to sell calls.
-Chris
Thank you. Very helpful. But I got slightly confused for a second - at minute 9, in the table, shouldn't the headings for put price and call price be the opposite?
Yes, even I feel the same.
is it almost the same as to buy a call (instead of buy direct stock/shares), then when profitable LOCK in your profits by Shorting the Call and Buying the Put for sometime....
If you buy a call below the current market, and sell a call above the current market for the same price, wouldn't you break even no matter how much the market goes beyond one of your two strikes?
You're describing a bullish call spread (AKA call debit spread). If the underlying is above both strikes at expiration, you'd get your max profit ((short strike - long strike - debit paid) x 100). But you'd experience your max loss (the debit you paid) if the underlying is below both strikes. That's because both options would expire worthless, and the premium you paid for the ITM call you bought is greater than the premium you collected from selling the OTM strike. Hope that makes sense.
whats the trade called where you sell a cash secured put and buy a long call with the premium from the put?
you are basically long on the stock and not hedging/ providing downside risk if the stock value goes down... You will be assigned the shares if stock price is below your target and your call will endup worthless.
How do you set it up in tastyworks?
1) Click on the ASK price on the stock price (top of platform)
2) Click on the BID price of a call option on the same stock (you pick the expiration and strike)
3) Click on the ASK price of a put option on the same stock (you pick the expiration and strike)
If you already own 100 shares, skip step #1.
You need to match up the quantities of the call and put based on how many shares you have. You need 1x call and put for every 100 shares you own.
If you own 300 shares, you can short 3x calls and buy 3x puts.
Tsly doesn't seem so bad now