Click here to Login








Reverse Collar Option Strategy

by bug man, 5333 days ago
Share |






The Reverse Collar is a hedge strategy that protects a position from a decline. The downside of using this protection is that the potential profits of the position on the upside are reduced.

As with the Collar Option Strategy, this strategy involves buying and selling puts and calls with the same expiration date but different strike prices. In order to create a reverse collar strategy, an option trader must buy calls and sell puts.
Example:
You hold 100 shares of a stock. You are bullish on that stock, but you would like to buy a protection against the stock's decline.
To establish a reverse-collar strategy, let us say you buy one call with a strike price of $200 at $2.5 and sell one put with a strike price of $180 at $2.75. This options strategy results in a credit of a $0.25. In this case, the strategy's breakeven is calculated by subtracting the credit from the put strike. When the strategy results in a debit, the breakeven is calculated by adding the debit to the call strike.
The maximum profit is unlimited above the call strike ($200) and equal to the credit ($0.25) when the stock price is between the call strike and the put strike.
The maximum loss is equal to the put strike minus the credit ($180 - $0.25 = $179.75) if the stock price is below the put strike and equal to the debit if the stock price ends between the strikes at the option expirations (In the current example the maximum loss would be equal to zero because the strategy generates a credit).

This item downloads Reverse Collar option combinations, for U.S. options, from the avasaram.com's Reverse Collar Screener.
The data is stored in a custom database "options_reversecollar". The database contains 18 fields. The fields' description is almost the same as with Collar Option Strategy. The difference is that in the collar strategy, the long option is a put and the short option is a call, while in the reverse collar option, the long option is a call and the short option is a put.


Share This ->
Share |


You have to log in to bookmark this object
What is this?




Type: Download Script

Object ID: 393


Country:
United States

Market: Options Market

Style:
Technical Analysis

Reviews
You must log in first

Join now
and get instant access for free to the trading software, the Sharing server and the Social network website.
Click here


Related objects

Empty

Number of reviews
Click to add a review
Average rate
Click to rate this item
Number of times this object was downloaded
Number of rates the current object received
Report an object
if you can't run it for example or if it contains errors
Click to report this object

Technical Analysis


Fundamental Analysis



Random Blog Posts

Short Index - Part 1

Trend Following and Moving Averages

Put-Call Ratio for Individual Stocks

Historical Market Data

What's new in this trading software?

Historical volatility estimators

Short Selling Stocks

Stock split & dividend

Show All

Number of reviews
Click to add a review
Average rate
Click to rate this item
Number of times this object was downloaded
Number of rates the current object received
Report an object
if you can't run it for example or if it contains errors
Click to report this object






QuantShare
Product
QuantShare
Features
Create an account
Affiliate Program
Support
Contact Us
Trading Forum
How-to Lessons
Manual
Company
About Us
Privacy
Terms of Use

Copyright © 2024 QuantShare.com
Social Media
Follow us on Facebook
Twitter Follow us on Twitter
Google+
Follow us on Google+
RSS Trading Items



Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.