New to options not sure if the following trade is actually a collar or not, trying to make it as near to a costless collar as possible but I have different expirations for the put and call.... Stock(CRUS) is @ $16.1, bought 100 shares. Long. Does it make sense to do the following... Buy a Sept. $16 Put. Premium is $1.45 Sell a Dec. $20 Call. Premium is $1.05 The Sep. $20 Call is only a $0.4 premium. I really don't plan on holding it past Sep. anyhow. But the Dec $20 call was the closest premium I could find. Wanted the premiums to offset each other as much as possible. Seeing it has a different expiration, im not sure if this is still a Collar or if this trade makes sense? thanks in advance for any input
I guess this is what some call a Calendar Collar, is there any calculators or spreadsheets for this type of trade? All I can find is ones for a regular collar with the same expiration date for the put and the call. Need one for different expiration dates. Looking for analysis of time vs. profit/loss. thanks in advance
It's a diagonal collar which is equivalent to a diagonal spread. The problem is that the long Sep put will decay faster than the short Dec call so as time goes by, the disparity b/t the two will increase (not good for you). AFAIK, the only thing that makes sense with this position (and I'm stretching reasonability with that) is that if that by selling a further out call you got more premium and if CRUS falls apart, your loss will be less.
It's a synthetic diagonal spread. Long stock+short call = short put. Short put + long put at different expirations = diagonal.
You can use a pricing formula in a spreadsheet to calculate the raw numbers. Web and stand alone programs exist as well. Some graph the positions. THo I don't use them, here's a couple: http://www.optionsprofitcalculator.com/ http://www.ivolatility.com/calc/ http://www.cboe.com/framed/IVolfram...ADING_TOOLS&title=CBOE - IVolatility Services
Thanks for the feedback. I moved the Put strike from 16 down to 15 which helps out slightly I believe, at least if it heads up. I went through all the suggested calculators, but none seem to have the inputs needed for this type of trade. Either there isn't two different expiration date inputs, or if there is than they only have the option for either call or put. So I took the optionsprofitcalculator and used the call/put calculator, i entered the call info in to get results and then did a seperate calculation for the put and just added the results together. Then combined in the profit/loss from the regular underlying long trade. Would this give me the estimated total needed?
I sent a request in on the optionsprofitcalculator site for a collar calculator and they put it up almost right away. Good stuff.