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Collar

BABA - How About A Collar Trade?The green zone is long term support. The Pitchfork projects path of price, on a Pendulum Swing basis. The sliding parallel (white) marks the overshoot and projected support. As we see, the steep down sloping yellow dotted resistance line was broken 5 weeks ago. But that's no reason to rush in. Why not wait for more facts? Do we have facts now? Yes, we have. a) support at the sliding b) today we see a close above the last high AND a break of the (grey horizontal) resistance. How can we play this with low risk? What about a Collar? 1. Buy Stock 2. Buy Put ATM Optional: - sell a longer dated Call (potentially limiting stock profit to finance the put) - sell lesser Calls, to let the rest of the stock position ride, if price close ITM and calls away your (partial) position. That's just an idea how to play it save. Why save? What if BABA tanks? - sell Put profit and buy more stocks to bring down the cost basis. Repeat until B/E or in profit. Additionally you can sell more Calls if they are above calculated cost basis. Highest Risk: If the stock go to zero, then the initial investment of stocks is gone. Could it happen? Yes. High chance of happening? Don't think so. Would love any input about this idea. Happy weekend §8-)
NYSE:BABALong
by Tr8dingN3rd
Idea History of the JHEQX Hedged Equity FundIf you’re new to my TV feed, I have been following 3 JPM hedged equity funds put spread collars (seagull) for 2 years now. Some points to be aware of before using any of this info: Theories are highly speculative dealer flows. All the information is public. Hedges are SPX quarterly expiry options. Core concepts originate from Cem Karsan on fin twit. I use the white paper “Implied Order Book” as my basis for Dealer Flow My Charting on the funds started in 2021 when I was trying to understand the role of volatility and the expiry of these funds before and after Opec/VolEx. I got my first prediction completely wrong. Then I began to map the history of the expirations My interest in the funds led me to 2 other similar funds running the same strategy. I started breaking down the delta and gamma of the hedges The math is fairly straight forward. So I started a pine script to track the collar The script involves plotting the delta/gamma/vanna for a put spread collar I had transformed into “The Hedge Whisperer” Pointing to my price targets like Smalls on the Sand Lot. But I realized I was getting lucky, and started to look for the distribution probabilities of the hedge The popularity of 0DTE continues to grow and the understanding of these dealer flows became an event of their own. In the coming weeks: Regular updates on hedged equity flows and levels. How I think JHEQX will be the straw that breaks the camels back. Trade ideas for upcoming expirations. And How to hedge assets using the same strategy Thanks to all who have commented and kept my interest in writing and researching. I hope you find these topics helpful.
SP:SPX
by SPYvsGME
2
Put Spread Collar (Seagull) on JHQTXThe collar resets the last business day of Feb, May, Aug, and Nov. This is the smallest of the 3 funds JPMorgan manages with a collar. At 3 billion in assets, the impacts on markets are still relevant. The options for the 3rd fund are not as well known, but using the reset date and the fact they use SPX options I’m able to make a guess at the relevant sizes and strikes using current open interest. Sell 7000 x SPX Aug 31 - 4350C - $90.50 for $633,500C Sell 7000 x SPX Aug 31 - 3300P - $31 for $217,000C Buy 7000 x SPX Aug 31 - 3900P - $120.88 for $846,160D Total cost of spread ~0 net I don’t have access to options history to find the previous quarters values except to use how the current quarters are collared, I’m able to take a guess based on date and close price to find relevant strikes. The idea behind the fund using this strategy is not to have to pay for put premium, instead they sacrifice asset profits above 5.5% when the options reset. The current unrealized gain is $1,967,000. Most of which will be eaten up by theta the next week while staying between the short call and long put (white zone). When EOM rolls over I’ll have a better opportunity to see the options transition the day of. The Dealers selling these strategies remain delta neutral so you can speculate that dealers will buy SPX delta back below the 3900P and Sell SPX the higher above 4350C. This is only 1 strategy of PUT/CALL Hedging and there are millions of other open contracts by hedge funds to limit risk but cap potential profits. Key takeaway All these hedges keep the market pinned to a certain set of outcomes. What we're seeing now with all the big swings up and down in the market are the result of lower liquidity. As funds compete for handles on the market we're seeing more frequent up/down moves. 2 reasons why we moved from 4200 range so quickly is: 1) Window of weakness from dealer flows around OPEX 2) A bigger fund like JHEQX (see chart link below) dealer will need to sell as September approaches. If this strategy interests you, I’ve been writing about it for almost a year. @SPYvsGME for chart updates and I’ll post a link to an options strategy calculator with the strikes.
SP:SPX
by SPYvsGME
8
Update to ABNB Trade Setup: Weekly CollarUpdate to ABNB Trade Setup: This trade popped nicely today after several days of consolidation. I am expecting a small pullback sometime this week and so set up the following weekly collar: 10 SEP 21 $170/$157.50 for $0.35 credit: Sold to Open the 10 SEP 21 $170 Call Bought to Open the 10 SEP 21 $157.50 Put Next week if the trade closes between that collar I will bump it up again. If it closes below the put strike I lock in a small win and if it closes above the call strike I lock in 1.69 R (1.69 x my initial risk). For details on the original trade setup:
NASDAQ:ABNBLong
by Dustin_D_RLT
SHORT ETH FENCE FOLLOW-UPA week ago (1/3/19), I wrote a piece on RISK MANAGEMENT recommending purchasing a March Fence (aka a collar) for firms that are long ETH in their inventory. The trade was to buy the H $100 puts and sell the H $250 calls against it. When we sent out this report last week, the market for the fence was -8/8 (worth flat premium). Today, the market 0/16 (worth $8 - put premium). The value of this fence went from flat to $8. You potentially could have hedged ~$8 (less fees) to offset the ~$20 of losses incurred today by this ETH selloff. if you have any follow-up questions or want to talk through this trade step-by-step, please give us a call and we can continue to help educate you in how to PRESERVE CAPITAL. Contacts Tim Kelly Founder and CEO tkelly@bitooda.io Brian Donovan Executive VP of Institutional Sales bdonovan@bitooda.io Dr. Ilya Kurland Chief Derivatives Strategist ilya@bitooda.io About BitOoda BitOoda is a digital asset advisory firm specializing in trade execution, market analysis, and structured products. For business inquiries, please e-mail info@bitooda.io
BITFINEX:ETHUSDShort
by BitOoda_LLC
SUPN - Collar for protectionBought SUPN at $5.65 as an investment, not a trade. In the past I have used collars to provide downside protection. Last collar expired last December. Collars should only be used in limited situation and timing them correctly is very important. It's only truly in hindsight that you can determine if the collar was a good decision. Last two collars worked out well. They cost me nothing and I didn't need to use them. I felt the urge to put a new collar in place. Look at the wedge patterns on the chart (2 past and possible current formation). Could be a potential move down. My limited order was executed. Sold a Sept $37 Call and bought the December $26 Put for .25 net credit. That's a pretty good credit especially considering SUPN would need more than 11% growth from current price for the Call to be in the money and expires 3 months before the Put protection. If SUPN grows 20% in the next few months, I won't be looking at this decision so favorably. Previous Collar - Expired in December 2016 Growth since last purchase
NASDAQ:SUPN
by JLJ002500