How Collar Strategy Works With Future Options In Different Scenarios? (part 1)

by David Jenyns on February 15, 2006

How Collar Strategy Works With Future Options In Different Scenarios? (part 1)
Lets take a look at how the strategy works with this position. For the sake of our illustration and to make our calculations easy let’s establish the collar using the December 27.5 put and the December 30 call, with both trading at $1.00. Remember our future options price was $28.50. The cost of the collar will be $0 because you paid $1.00 for the put but you collected $1.00 from the sale of the call.

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