Collar Calculator

Collar Calculator Help

Step 1: Symbol

The default for this is that once the "stock ticker" is entered, the strike price of an at-the-money option that is 3-5 months from expiration will be displayed. If the full "option ticker" is entered, the values for that particular option and underlying security are displayed. Enter the stock or option ticker symbol, select the appropriate Ticker Type and click on "Go!"

Step 2: Price

The current price for the underlying security or whatever other price you want to enter.

Step 3: Quantity

The number of shares of the underlying that is being evaluated. Not the number of contracts, but the number of shares. The calculator assumes 1 contract to be sold for every 100 shares of the underlying.

Step 4: What If Price

The assumed price for the underlying security at expiration of the option.

Step 5: "Comm. type" and "Comm. amount"

This is the type and amount of commission you may be assessed only for the underlying security. This should notinclude the commission for the call option – this will be done in step 11. "Total" is a flat dollar commission for the entire underlying portion. "Rate" is a dollar per share commission – if the commission "rate" was \$1 per share and 100 shares were traded, the commission would be \$100.

Step 6: Dividends

Select "Use dividends in P&L calculations" if you desire to have the dividends included in the calculations; otherwise dividends will not be included. If the underlying pays no dividends, move to step 7. By default, the "Last Date" box is set to the next ex-dividend date (confirm ex-dividend dates with your broker). "Amount Per Share" represents the dividends to be paid per share for the specified date. If the firm pays a \$1.00 annual dividend on a quarterly basis, the amount per share would be \$0.25. "Frequency" is how often the firm pays the dividend. Most dividend paying stocks in the United States pay quarterly dividends.

Step 7 (right hand column): Exp. Date

The expiration month of the option you are analyzing.

Step 8: Days to expiration

The number of days until the option expires. This will automatically be set to the number of days left to expiration for the month you select.

Step 9: Strike Price

The strike price of the call option that will be sold to enter into the covered call and the strike price of the put you are buying.