Collar Trading

Discussion in 'Options' started by JayK, Jan 19, 2006.

  1. JayK


    Can someone help me find information sources on how to trade collars? By collar I mean buy the stock and the put, sell the call; keep adjusting, etc. Good books, websites, seminars on CD, whatever. Any suggestions?
  2. There is no sound rationale for collars as a trading vehicle. They're best utilized as a large position hedge for little to no outlay. On occasion, skews will be large enough to achieve some material-reduction on the share cost-basis.

    MM's like to run an implied premium on futures by shorting futures, shorting otm puts and buying otm calls. The MM will recieve an implied premium to his short futures entry = the net credit received on the put + [L]call.
  3. JayK


    Thanks riskarb, I appreciate your feedback.