Warren Buffett’s two rules of money are simple. #1 Don’t lose money, #2 See rule #1. To that end, it’s been an extremely volatile market to say the least. There is a non-war war going on, oil infrastructure has been destroyed and there may be more to come.
Since I don’t like losing money, I have moved to large cash position, much like Warren Buffett but I like to stay invested and squeeze out income or returns somehow. I generally am thrilled to earn 10% return on an investment and my collar app is helping me do that even during volatile markets.
I run the app daily and yesterday gave me the list above for long term collars. I also have output for short term collars and ones specific to ETFs to cover different time horizons and equity instruments. As you can see from the image above, there were slim pickings and it’s been like that for a while. The volatility makes it difficult to find good collars.
I took the plunge and bought 100 shares of Amazon today and sold the March 19 2027 $250 call and bought the March 19 2027 $230 put. Essentially this is a minimal loss trade should Amazon tank but an upside cap close to 10% (annualized) should Amazon continue to rally and grow beyond. This is the first item highlighted in the app output above, I considered the other for higher gains but it also had higher potential losses and in this volatile market, I will take minimal losses versus riskier gains.
The key here is I can always roll the option into the future if I want to keep Amazon and have the right to sell it at $230 if things go badly for Amazon.
I also have collars around NVDA, IBIT, IGV, SLV, GLD, and GNRC and all are providing either minimal to zero losses and/or 10% upside return (annualized).
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