Collars not just for the dogs?

In this environment when stocks are trending sideways and investors are searching for ways to improve on their respective investments many feel hampered by the choices presented by the market. Stocks and bonds prove to be the blunt instruments of investing. Even in the world of multiple asset classes and sector diversification it seems the investments with the least amount of correlation are the simple stocks and bonds your grand pappy was trading. The question is what you do once you have done everything wrong. You have accumulated a concentrated position and you rode it down to price that you would be reluctant to sell. You acknowledge and are aware of other opportunities but are afraid to make changes due to the blood loss. What is the investor to do? One option- is “options**”. Using strategies to “Collar” a position or to cover a position can generate income or even protect the shares from unwanted volatility. This strategy works when you have some level of appreciation and are fearful of losing. (Great for extreme low cost shares). Or stocks that need an insurance policy for estate settlement (as an example). In simple terms a collar can be established by holding shares of a stock. Then purchasing an options strategy that essentially buys insurance within a range. Sounds easy? I have included an in depth description of this potential strategy linked below. **Option strategies may not be suitable for all investors. Investors should read the Characteristics and Risks of Standardized Options before investing. Written and published by The Options Clearing Corporation, this booklet must be read by an investor prior to buying or selling options contracts and explains the purposes and risks of options transactions. Investors may obtain a copy of the booklet by going to http://www.optionsclearing.com/publications/risks/riskchap1.jsp Enjoy. http://www.optionseducation.org/strategy/collar.jsp