Trading

By Stuart Elrick An option collar combines two option positions around an existing holding: a protective put establishes a lower sale price, while a covered call establishes an upper sale price. The structure narrows the range of possible outcomes for a defined period. How the structure works The put can limit losses below its strike […]

By Stuart Elrick Risk-averse trading begins with a less glamorous question than market direction: how much loss can a position or portfolio absorb without undermining its purpose? Diversification and concentration Diversification spreads exposure across assets, sectors, issuers, or strategies. It can reduce the effect of one position performing poorly, but it cannot eliminate market-wide losses. […]