Vertical Collar

iplay1515 · Nov 1, 2011

Quote from piezoe:

Hey, Spindr0 was nice enough to give you two very good answers. He told you what to Google to find out what a collar was, and then he explained that using the word vertical in conjunction with collar is superfluous. You can just call it a collar. The least you could do would be to thank him for his time. Now go and do some reading on collars.

Are all collars vertical or can they be diagonal? If so, how do you specify which collar you are speaking of?

spindr0 · Nov 2, 2011

This thread has become a real chuckler

Piezoe, you mandated a thank you and it appeared in 4 minutes. I'm impressed!

Iplay1515, your thank you is accepted. I hope to be able to assist you in the same manner in the future

Forex-Forex, thank you for the golden shower analogy

spindr0 · Nov 2, 2011

Quote from iplay1515:

Are all collars vertical or can they be diagonal? If so, how do you specify which collar you are speaking of?

What part of the previous/following isn't clear?

"Vertical is redundant when takling about a collar. It is assumed that all components are of the same expiration unless it is stated otherwise."

iplay1515 · Nov 2, 2011

Quote from spindr0:

What part of the previous/following isn't clear?

"Vertical is redundant when takling about a collar. It is assumed that all components are of the same expiration unless it is stated otherwise."

Based on a small sampling of the 40+ million hits from the google search, it certainly appears that vertical is the assumption as you indicated given that there were numerous references to diagonal collars and no mention of vertical collars.

Were it not for the use of the term "vertical collar" by a notable author and instructor, this thread would not exist.

The above coupled with the fact that with option strategies, there appears to be an abundance of different names for the same strategy which creates significant confusion for all.

iplay1515 · Nov 2, 2011

Quote from spindr0:

This thread has become a real chuckler

Piezoe, you mandated a thank you and it appeared in 4 minutes. I'm impressed!

Iplay1515, your thank you is accepted. I hope to be able to assist you in the same manner in the future

Forex-Forex, thank you for the golden shower analogy

In Greek Mythology, Piezoe is a lesser god but a god no less.

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Avoid the temptation to Google "google". That will destroy the Internet. - Steve Martin

iplay1515 · Nov 2, 2011

So back to draining the swamp.

When using a collar to insure against an opening gap for a long equity position held overnight, how does one determine the optimum coverage for the least premium?

For example, the equity was purchased at 50 and the current market is also 50 and the intent is to close the collar after the market opens the following day.

What is the recommended process to begin the analysis?
Is there a recommended app. for this analysis?

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"One of the problems with information obtained from the Internet is one can never be sure of it's validity" - Abraham Lincoln

spindr0 · Nov 2, 2011

Quote from iplay1515:

Based on a small sampling of the 40+ million hits from the google search, it certainly appears that vertical is the assumption as you indicated given that there were numerous references to diagonal collars and no mention of vertical collars.

Were it not for the use of the term "vertical collar" by a notable author and instructor, this thread would not exist.

The above coupled with the fact that with option strategies, there appears to be an abundance of different names for the same strategy which creates significant confusion for all.

If you're going to Google and parse every single option related word, it might be 2016 by the time you get to the chapter on "vertical" spreads which is the same strategy as your so called vertical collar.

spindr0 · Nov 2, 2011

Quote from iplay1515:

When using a collar to insure against an opening gap for a long equity position held overnight, how does one determine the optimum coverage for the least premium?

Checking current quotes is often helpful

What is the recommended process to begin the analysis?

Open option chain for the underlying you're interested in

Is there a recommended app. for this analysis?

Would time and effort qualify?

iplay1515 · Nov 2, 2011

Quote from spindr0:

If you're going to Google and parse every single option related word, it might be 2016 by the time you get to the chapter on "vertical" spreads which is the same strategy as your so called vertical collar.

Exactly my point about different names for the same thing in the world of options.

iplay1515 · Nov 2, 2011

Spindr0, Elite Trader is one of the best resources available, so yes, the time and effort to post here certainly qualifies, and the opportunity to meet and converse with such an esoteric group is priceless.