Back in January I entered into a collar on RBLX with the hopes that it would rebound and provide an annualized 10% return. Since I wrote that post, RBLX has fallend by 50% or so but I had a collar so my losses were limited to about $250 on this trade.
This is what I love about collars, it had the potential to make me 10% and it limited my losses to about 3% or so. The collar didn’t actually expire until January 2027 but I don’t like the potential for total economic collapse given the Iran oil situation so I opted to close the position to move to cash and take the small loss.
If the Iran situation isn’t resolved by the end of June we may have total economic chaos around the world. I expect airlines to run out of fuel, diesel will be very expensive meaning all the supply chain will have an added “tax” that will drive up the cost of goods across the board.
I am looking at my other collar positions and trying to figure out if I should liquidate any of them at the moment. For me, the time to move to cash is now. Goldman Sachs CEO recently said he is seeing more greed than fear and I keep Warren Buffett’s, “Be fearful when others are greedy and be greedy when others are fearful.”
As a reminder, back in February AI predicted a market correction/crash sometime between June 18 and August 21 after I fed it some data and while I hope it doesn’t happen, AI seems to have been eerily correct.
The S&P 500 is way over valued right now and my gut and AI tell me this won’t end well.
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Are you worried about the Iran situation and an over valued market?