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Adjusting the Collar Trade

Released on Wednesday, November 16, 2016OPTIONS
The collar trade is a highly versatile, protective options strategy used with a long position where you can adjust the options to reflect real-time trends and your market expectations. With the correct adjustments, a collar trade may continue to increase the value of your portfolio even while the stock value is decreasing. The key feature of the collar is that it can be converted from a bullish to bearish trade or vice-versa. Understanding theses simple adjustments may also help improve a losing trade.
Learning Points:
How to enter a collar trade
Active management of a collar trade
Strike price and expiration series
Timing with short calls and long puts

An option is a contract to buy or sell a specific financial product at a certain price on a certain date. It is possible to lose all of your investment if the underlying market moves against your position. Options trading is not suitable for all investors.  

Traders should consult a tax adviser about any potential tax consequences of their trades. Your account to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. Automated trading, as it relates to direct-access electronic order placement and execution of equity options trades, requires manual one-click verification before an order is sent. Each leg of a multi-leg spread incurs a commission and bid/ask cost that can be significant. A monthly account service fee of $99.95 may apply. A $14.95 fee applies for options exercise or assignments at expiration. For early options exercises or assignments, a $1.50 per contract fee will apply, with a $5.95 minimum. There is an Options Regulatory Fee of $0.0407 per contract ($0.05 minimum) applicable to all options transactions. A $1 cancellation fee may apply. These costs will affect the profitability of all stock and options trades and should be considered prior to making any trade. Please visit for relevant risk disclosures and a link to the document titled Characteristics and Risks of Standardized Options or call 1-888-OPTIONS to obtain a copy.

Greg Jensen
Options Animal, Founder and Chief Trainer

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