Insurance for shares you don't want to sell, and a way to make it free. This lesson prices the put, then builds the collar.
After this lesson you can
- Work out a protective put's worst case: the distance down to the strike, plus the premium
- Compare strikes and expirations, and estimate what insuring all year would cost
- Explain what a put does in an overnight gap that a stop order can't
- Build a collar, read its floor and ceiling, and choose its strikes
- Manage a collar as the stock moves, and avoid the five mistakes
Chapters
- 0:00Insurance for your shares
- 1:24The put as insurance
- 2:52Choosing the floor
- 4:15How it plays out
- 5:44Building a collar
- 7:13Choosing the collar's strikes
- 8:46Managing a collar
- 10:00Five mistakes
- 11:00The whole lesson on one screen
Practice in the game: Level 10 · The Safety Net, Level 14 · Zero-Cost Insurance