Exchange-traded funds (ETFs) have enabled investors to quickly and easily capitalize on opportunities around the world. Stock options can help enhance these strategies by effectively controlling upside potential and downside risk. In this article, we’ll explore one such strategy that can help limit downside risk during times of uncertainty without any added expense [see 101 ETF Lessons Every Financial Advisor Should Learn]. What Is an Equity Collar? Suppose you’ve just purchased the S&P 500 SPDR with a specific price target and stop loss in mind. Many traders might simply set a stop-loss or take-profit limit order, but stock options provide an alternative that may be attractive in certain cases. Collars are a unique strategy that are perfect for cases like these, effectively setting both of these points via an option contract [see ETF Call And Put Options Explained]. Collars are created by going long in an underlying equity–such as the SPY–and then [...] Click here to read the original article on ETFdb.com. Related Posts: Which Market Cap Is Best? Large (SPY) vs. Mid (IJH) vs. Small (IWM) Friday’s ETF Chart To Watch: SPY Flirts With Double-Top Ahead Of GDP Report Daily ETF Roundup: GLTR Jumps On Gold Demand, IYZ Soars After CCI Earnings Daily ETF Roundup: PPA Pops On Boeing Earnings, IBB Slumps On Declining Amgen Sales ETF Protective Put Options Strategy Explained
Exchange-traded funds (ETFs) have enabled investors to quickly and easily capitalize on opportunities around the world. Stock options can help enhance these strategies by effectively controlling upside potential and downside risk. In this article, we’ll explore one such strategy that can help limit downside risk during times of uncertainty without any added expense [see 101 ETF Lessons Every Financial Advisor Should Learn]. What Is an Equity Collar? Suppose you’ve just purchased the S&P 500 SPDR with a specific price target and stop loss in mind. Many traders might simply set a stop-loss or take-profit limit order, but stock options provide an alternative that may be attractive in certain cases. Collars are a unique strategy that are perfect for cases like these, effectively setting both of these points via an option contract [see ETF Call And Put Options Explained]. Collars are created by going long in an underlying equity–such as the SPY–and then [...]
Click here to read the original article on ETFdb.com.
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