Trading 101: Using Options to Emulate Long/Short Stock | Closing the Gap

Trading 101: Using Options to Emulate Long/Short Stock | Closing the Gap

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Trading a “collar” is defined as long shares of stock while simultaneously selling an Out of the Money (OTM) Call and buying an OTM Put Option, which is used to protect gains in the stock component. However, this strategy can be capital intensive due to the outright long shares of stock. For this, traders can set up a synthetic collar which consists of a Long ITM call to emulate the stock. How do these two strategies compare in terms of Probability of Profit, Margin Requirement and P/L? Find out on this episode of Closing the Gap! Plus, learn how to set up a reverse collar using Put options!

See more videos from the Closing the Gap Series:

Tom and Tony talk with guest Joe Kinahan from TD Ameritrade about the differences in strategies used by professional traders and self-directed investors. Check out how they try to close that gap!

You can watch a new Closing the Gap episode live and check out all previous episodes everyday at!

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