O'Reilly logo

Options Made Easy: Your Guide to Profitable Trading, Second Edition by Guy Cohen

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

The Collar (or Protected Buy-Write)

The Collar is designed to produce an extremely low risk strategy where, in certain cases, the trader can even enjoy a virtually riskless trade.[6] It may sound too good to be true, but it is possible—although I recommend that you enter in two separate orders for buying the stock and trading the calls and puts. Floor traders do not like the idea of you successfully executing a trade like this, even if the potential returns aren’t spectacular.

[6] The risk-free position generally only applies to the position at expiration.

For the strategy to work in this way, it needs to be a long-term strategy, with the options expiring at least one year out, that is, Long-term Equity AnticiPation Securities (LEAPs®). LEAPs ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required