Great questions. My opening positions are positions that I leg into. This helps to not buy all at once. I do not trade with a very large account. About 100k. I only trade stocks that I follow and understand such as NVDA, SQ, AMZN, TWTR, FB, SPLK, MELI. Given the risk parameters for OA, I am not going to buy an option to trade AMZN or MELI. It is much more than the 2% account risk. A lot of the stocks that I trade have horrible bid/ask spreads. So this may affect my performance. My friends have much larger accounts and take ungodly risk trading Iron Condors and double diagonals. I do not take dangerous risk.
Well, it depends on how wide or tight the collar is. Trading a collar with a combined delta of 20 one is only going to make 20% for every dollar the stock goes up. That will not do much to help one's portfolio grow in a roaring bull market, but I have not seen the results from Greg's portfolio so I do not know if he lost money. He is a great trader, but the market often gets the best of us sometimes.
as jeff would say: it depends. there's no formula. i look at the technicals, option cost, am i expecting a quick more or slow grind...yes i had MNST too. stay with it, i rolled my Jun 65 Calls down to June 55. the miss was due to international orders being pushed out. they're killing it.
Don't mean to split hairs but are you legging into the combo or are you averaging in by buying (or selling) the combos at different prices, eg. increasing position size? My initial question was geared to what is OA recommending when it comes to long stock collars? Buy all three legs of the collar all at once or take the position in the underlying and then leg into the collar?
Yes, a narrow collar will not do much to help one's portfolio grow in a roaring bull market. If the collar can only make 20% for every dollar the stock goes up then it can only lose 20% for every dollar the stock drops. In order for "Greg" to lose money with long stock collars in a roaring bull then either he has a lousy picker or his risk management sucks (take small profits, incur large losses). Or both. He should have under performed but still should have been positive in a roaring bull.
The typical OA answer to just about every question is that "it depends". Over earnings, I've seen a few instructors structure a collar trade. Some will buy a put as a part of a collar trade. Some will structure a covered call and then adjust the covered call to a collar trade and honestly it really depends on the market conditions and the equity. The best use for the collar trade is for a bull put gone wrong then one takes the stock and collar. That is the most common recommendation for the collar. I hope that this helps some. As for Greg, I do not know what he held in his account. A lot of people in the OA felt that the market was overbought last year and some structured trades for a pull back. The pull back did not really happen until this year. That could be one of the reasons his account may have been down. Also, the trades are pretty conservative. Too conservative for my taste.