I am interested in the nuances of the strategy. There appears to be very little literature written on the strategy as opposed to the covered call strategy. Would you (or anyone) post an actual trade while discussing the adjustments along the way as an educational tool? Alternatively I would propose a paper trade that can be followed in real time.
Married puts and Collars Strategy
- Thread starter lowvoltrader
- Start date
No need to reinvent the wheel
, what you are proposing is already being done. Go to www.randomwalktrading.com and check out 'tag-along'.db
thanks for the response. i ordered the book, stocks options and collars on Friday; i look forward to receiving it this week. have you found any nuances not covered in the text?
Heaps! But the book is still very good.
db
Hi guys, I finally found someone mentioning about the randomwalk book. Their forum seems to be dead. For those who read the "Stock, Options and Collars" book, can someone explain the part B3 on page 187, on the sales of Calls in the position when stock Advances/moves up and when you want to buy back and sell another call at higher strike price?? Don't understand how the collar can be adjusted without a debit.
It will be debit (you have to pay more). The bad news will be if the stock tank after you roll the positions by selling the higher stake and buy back the current one, in this case you loss money.
This all back to the millions dollar question, "when" to roll or aka timing. If you good in timing, a much cheaper approch, debit or credit spread will do the same job. Collar or cover call is a only a marketing tricks used by some snake oil salesman mentors to trick the newbie with " extra income". (newbie are normally a buy and hold stock holder that own stock).
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I can't speak to that book specifically but usually when you're rolling up a call you're also rolling out in time. Even though the underlying is closer to the short call, theta has eaten away at the time value. If you roll up and out it can be frequently at about the same price (depending on market conditions of course). Pull up an option chain and look at this month and next month at different strikes and you'll see.
Hi,
I think rolling up and out if I sell around the same strike price I can see the premium is about the same or more but if underlying price went pass the call strike price and become deep in the money, you won't get the same premium if we do a collar again right? Unless we sell another Itm call?
I think rolling up and out if I sell around the same strike price I can see the premium is about the same or more but if underlying price went pass the call strike price and become deep in the money, you won't get the same premium if we do a collar again right? Unless we sell another Itm call?
See my previous reply - timing, timing , timing ..
Collar or covered call will not give you any edge or making money in long run.