TThe object of investing is making money. We all want to increase the values of our portfolio’s. When markets exist that scramble the basic tenants of investing you must learn to look outside the box. This is why we teach others how to use options. Let us revisit the idea of collars.
A collar is where we buy and sell a put and a call. Now depending on your perception of the market the collar can be turned to accommodate investors needs.
An example would be (protecting your downside), you sell a call and thus receive funds. The second part of the collar involves buying a put where you spend the funds you received from the call premium. If the stock falls the call will depreciate in value. The put will increase in value. This type of collar can be very effective in a falling market. We encourage you to become a member of optionsdojo, so that you will know how to setup your collar.
Keep an eye out for upcoming videos and options selections in the coming weeks.
As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money. NEVER invest before consulting your professional advisor.