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The Collar Is a Synthetic Call Vertical. Here's Why That Matters.
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0:00lesson
Covered Calls vs. Collars — Hedging Strategy
- Covered calls reduce cost basis, not hedge
- Collar = long stock + short call + long put
- Credit from short call funds long put
- Put offsets stock losses in crashes
2:15GM· ticker
GM — Collar Setup: 84 Call, 76 Put
- Sell 84 calls for $2 → 2.5% cost basis reduction
- Buy 76 put for $1.80 → 20 cent net credit
- Put protects against 5%+ stock drop
- Credit covers partial put cost
4:35GM· ticker
GM — Short-Term Put Gamma
- 78 put cheaper than 74 put
- Shorter expiration = higher gamma
- 78 put responds faster to price drops
- Theta works against long put
6:36lesson
Collar vs. Synthetic Vertical — Capital Efficiency
- Three-legged trade = synthetic vertical
- Single spread vs. three separate trades
- Lower capital requirement
- Same risk profile
8:52lesson
Collar Strategy — Risk Management Notes
- Only collar existing stock positions
- Temporary put hedge for short-term risks
- Avoid over-leveraging
- Choose strikes wisely
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