Today, we will look at a completely risk-free options collar trade. Risk-free collars are not synonymous with zero-cost collars. The zero-cost collar just means that you can add an options collar around a stock for zero additional cost. Those are common, but they are not risk-free. The options collar we are discussing is less common, … Read more
A zero-cost collar consists of buying a put option and selling a call option to finance the cost of the put option. When the correct strikes and expiration are chosen, this incurs no extra cost to the investor. The option collar will hedge downside risk during earnings season, which can be volatile, as unexpected results … Read more
By Varun Pothula About Varun:Varun Pothula is a Quantitative Analyst at QuantInsti. He along with Rajib Ranjan Borah and Euan Sinclair has played a key role in curriculum creation of options trading module for EPAT. Varun’s academic credentials include a Master’s in Financial Engineering from WorldQuant University and a Bachelor’s in Mechanical Engineering from Vellore … Read more