There are two types of two-legged collars.
Bearish - Sell calls and buy puts.
Bullish - Buy calls and sell puts.
I'll leave you to figure out what will happen as the price of oil goes up and down, or stays in the slot..
The three-way collar can work like this.
From high to low: Buy calls. Buy puts. Sell puts. Now, figure out what will happen as the price of oil Moves to 70 or 20.
Some people just can't figure out the value of the stock. The combination of earnings, buyout and oil prices have confused the traders.
If frogs had wings, they wouldn't bust their butts when they hit the ground.
I have short calls pending. I don't know what would constitute good earnings. Given the KOG buyout, the revenue should be up $200 mm and the EPS up a few cents. I don't know what the market thinks. I don't have high expectations.
Clarification: That's two months in a row in which I was assigned on Friday and covered on the following Monday. It is time to sell Mar Calls.
My short $11 Feb calls will clearly expire, worthless. Easy money yet again. Normally, I would have already sold Mar options, but the earnings report is coming out. I will not touch it until then.