collar is self-financing

 

the premium you collected from selling the call is used to finance a downside put protection. the goal is to lock in a minimum payoff, while leave the position someroom to run. 

say the stock is currently trading in the market at $50. you can sell some upside call at $55 while buy some downside put at $45. the net cost is about zero. you do need to put some cash down as margin though.

if stocks go all the way to $55, and you are still bullish, you can then roll it to a new collar with a new $50 put and a $60 call.

just my 2c.

所有跟帖： 

• thanks。是的。这是一个很有趣的tool。我会仔细考虑的。 -青风- ♀ (0 bytes) () 03/22/2013 postreply 11:37:11

• 又碰到一个卖服务的? :-) -人参公鸡- ♀ (0 bytes) () 03/22/2013 postreply 13:36:57