Collars
- Thread starter the_dude
- Start date
We have used used collars in covered call/put situations where the underlying is say a small drug company, about to get approval/disapproval.
Stock @ $52
$55 Call @ $6
$45 Put @ $3
Buy the stock, sell the call, buy the put.
With Collar
Approval, stock goes to $60, 5.75%+ return.
Disapproval, stock goes to $25, (7.75)%- return
Without Collar
Approval, stock goes to $60, 11.50%+ return.
Disapproval, stock goes to $25, (40.40)%- return
We have only used it in a large portfolio of writes, in explosive situations, where we are right a large percentage of the time in picking direction.
For a small number of positions, there are better strategies.
Stock @ $52
$55 Call @ $6
$45 Put @ $3
Buy the stock, sell the call, buy the put.
With Collar
Approval, stock goes to $60, 5.75%+ return.
Disapproval, stock goes to $25, (7.75)%- return
Without Collar
Approval, stock goes to $60, 11.50%+ return.
Disapproval, stock goes to $25, (40.40)%- return
We have only used it in a large portfolio of writes, in explosive situations, where we are right a large percentage of the time in picking direction.
For a small number of positions, there are better strategies.
We have all proprietary software, so I am probably not the right person to ask; however I used to use Tradestation, a lot of problems loading all the symbols, can not follow the universe of strikes, lousy technical support, etc..
We use a combination of feeds, the best one for options is probably Hyperfeed, but very expensive, Real Tick is all right for an inexpensive alternative, just be careful, there option quotes hang up when a lot is going on, ILX is as good as Hyperfeed, just more expensive,