It is not secret for those that follow my trading that I utilize Collars frequently in my trading. Some current trades with Collars:
- $AMBA I am long stock & own the March 34/32/27 Collar Put Spread
- $APC I am long stock & own the March 85/82.5/77.5 Collar Put Spread
- $BAS I am long stock & own the March 22.5/20/17.5 Collar Put Spread (capped)
- $TRIP I am long stock & own the March 90/95 Collar (Put is higher than Call strike, capped)
There are several key benefits to using Collars but for this post I thought I would highlight a more rare use of them – the Bear Collar.
You won’t see this mentioned much (I sure don’t) but here is how a Bear Collar is layed out:
1) You are short stock
2) You sell downside Puts
3) You buy upside Calls (or a Call Spread)
I have several positions with a Bear Collar on including $PCLN:
- I am short stock at $1354.3 from 03/10
- I am short the March $1330 Puts
- I am long the March 14w $1340 Calls
- This Bear Collar was done for a $.80 debit on 03/10
Price is currently hovering around the $1320 level so the short stock is capped. If I do nothing with the trade tomorrow, the long $1340 Calls will go poof & I lose my short stock protection (the point to a Bear Collar). This will be something that I will tend to on Friday, 03/14.