I am going to attempt to create a thread to share my experience trading stock collars in this forum since the group here seems more willing to learn compared to the RDPD forum. I will update as I make changes in my positions in a corporate account.
On Friday, I initiated a position in DRYS. I purchased the Sept 55 puts first at 5. Then, I purchased DRYS at 57.89. The plan will be to wait for about one week and see what develops with the stock, possibly selling the Sept 60 calls to create a collar when the stock has run up. I also plan to ease into the stock over the next several weeks.
I took the total amount of my purchasing power and divided by 12. I plan to allocate an equal amount into positions over the next 12 weeks essentially purchasing a full position over a quarters time.
The reasoning is that over that time the stock may increase, decrease, or remain virtually unchanged. If decreasing, I can purchase more shares. If increasing, my initial purchases are becoming increasingly profitable. If unchanged, I need to start selling some calls to pay for the puts but can still make money while waiting for some movement. I look to make the next purchase on Thur or Fri of the upcoming week.
On Friday, I initiated a position in DRYS. I purchased the Sept 55 puts first at 5. Then, I purchased DRYS at 57.89. The plan will be to wait for about one week and see what develops with the stock, possibly selling the Sept 60 calls to create a collar when the stock has run up. I also plan to ease into the stock over the next several weeks.
I took the total amount of my purchasing power and divided by 12. I plan to allocate an equal amount into positions over the next 12 weeks essentially purchasing a full position over a quarters time.
The reasoning is that over that time the stock may increase, decrease, or remain virtually unchanged. If decreasing, I can purchase more shares. If increasing, my initial purchases are becoming increasingly profitable. If unchanged, I need to start selling some calls to pay for the puts but can still make money while waiting for some movement. I look to make the next purchase on Thur or Fri of the upcoming week.
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