Expand model tag support: add GLM-5.1, simplify Anthropic IDs, scan tags anywhere in message
- Flink update_bars debouncing - update_bars subscription idempotency bugfix - Price decimal correction bugfix of previous commit - Add GLM-5.1 model tag alongside renamed GLM-5 - Use short Anthropic model IDs (sonnet/haiku/opus) instead of full version strings - Allow @tags anywhere in message content, not just at start - Return hasOtherContent flag instead of trimmed rest string - Only trigger greeting stream when tag has no other content - Update workspace knowledge base references to platform/workspace and platform/shapes - Hierarchical knowledge base catalog - 151 Trading Strategies knowledge base articles - Shapes knowledge base article - MutateShapes tool instead of workspace patch
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gateway/knowledge/trading/strategies/options/collar.md
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gateway/knowledge/trading/strategies/options/collar.md
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description: "A hedging strategy (fence) buying stock, buying an OTM put at K1, and selling an OTM call at K2 > K1, capping both upside and downside within a defined range."
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tags: [options, hedging, bullish, collar]
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---
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# Collar
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**Section**: 2.53 | **Asset Class**: Options | **Type**: Hedging
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## Overview
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The collar (a.k.a. "fence") is a covered call augmented by a long put option as insurance against the stock price falling. It amounts to buying stock, buying an OTM put at K1, and selling an OTM call at K2 (K2 > K1). The trader's outlook is moderately bullish. This is a capital gain strategy. Note: a short collar is a covered put augmented by a long call option.
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## Construction
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- Buy 1 share of stock at S0
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- Buy 1 OTM put option at strike K1 (K1 < S0), paying put premium
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- Sell 1 OTM call option at strike K2 (K2 > S0 > K1), receiving call premium
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Net debit or credit H (= D if net debit, = -C if net credit)
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## Payoff Profile
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f_T = S_T - S0 + (K1 - S_T)+ - (S_T - K2)+ - H
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- Breakeven: S* = S0 + H
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- Max profit: P_max = K2 - S0 - H (if S_T >= K2; upside capped by short call)
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- Max loss: L_max = S0 - K1 + H (if S_T <= K1; downside protected by long put)
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## Key Conditions / Signals
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- Moderately bullish; willing to cap upside in exchange for downside protection
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- Ideal when trader has existing long stock position and wants to protect gains
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- Often structured as zero-cost (H = 0) by choosing K1 and K2 such that premiums offset
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## Notes
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The collar sacrifices unlimited upside potential (capped at K2) in exchange for limiting downside loss (floored at K1). It is one of the most common hedging strategies for long equity holders. A zero-cost collar is popular for protecting unrealized gains.
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