MTM Options Trader Newsletter - What Is a Collar Option Strategy and How Does It Work?

[image]( [image] This Week in the Market Despite the inevitable pullback that is sure to come at some point, stocks continued to defy the odds moving higher yet again last week. The major indexes keep setting all-time highs, although the Dow has not been able to do so recently. Nasdaq looks to be the most extended as growth stocks have showed renewed vigor again over the past several weeks. Concerns over the Delta (no relation to options) variant leading to another surge in virus cases may have health officials worried, but so far the market has not focused on the issue. As you might imagine with this consistent move higher, implied volatility levels remain low keeping option premiums at bay. A short week of trading after the holiday weekend kicks off Tuesday. Implied volatility levels tend to be even lower for short weeks. It is a quiet week as far as economic reports go, but the Federal Reserve is expected to release notes from its last session on Wednesday. Quarterly earnings continue to inch closer, but this week is completely dead as far as reports go. Have a safe, healthy and prosperous week, and stay disciplined and focused as a risk manager! Jul 7: JOLTS Jul 7: FOMC Minutes Jul 8: Jobless Claims Jul 8: Consumer Credit Jul 9: Wholesale Inventories [Read Our Blog]( What Is a Collar Option Strategy and How Does It Work? When I think of collars as an option trader, I think of sleeping better at night. Option collars can potentially protect a stock position in case the position declines. Like everything that involves options, there are trade-offs too. Collars cannot work miracles, but they do have their benefits as well as their limitations. Let’s take a look at the definition of a collar and several considerations when using the strategy. [Continue Reading ...]( MTM Watchlist Here are a few trade ideas we will be considering in group coaching class this week: NVDA – The stock has been on fire, and it looks like it may want to move higher. Bull call and bull put spreads will be examined again. AMC – If the stock can rally back a tad, additional call credit spreads will be considered around the $60 level. DKNG – The stock has struggled to move higher, and with it currently trading below its 200-day moving average, selling credit spreads may seem prudent. [image] Happy 4th! As a reminder, the market is closed Monday, July 5, in observation of Independence Day. The Market Taker Mentoring team wishes you a safe and happy holiday! The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2021. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States