JMF Capstone Wealth ManagementBeware The Drag Of Collar Strategies – JMF Capstone Wealth Management https://www.jmfcapstone.com An Alabama registered investment advisor Fri, 21 Nov 2025 19:30:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Beware The Drag Of Collar Strategies https://www.jmfcapstone.com/2016/06/27/beware-the-drag-of-collar-strategies/ https://www.jmfcapstone.com/2016/06/27/beware-the-drag-of-collar-strategies/#respond Mon, 27 Jun 2016 09:00:02 +0000 http://evolvemypractice.com/?p=2913 It’s been well-documented that, in general, investors are risk-averse. This aversion to losses leads many investors to seek “tail protection” strategies. And the most direct way to obtain downside protection is to buy put options. However, purchasing volatility insurance is expensive, because, historically, realized volatility has been well below the level of volatility implied in...

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]]> It’s been well-documented that, in general, investors are risk-averse. This aversion to losses leads many investors to seek “tail protection” strategies. And the most direct way to obtain downside protection is to buy put options.

However, purchasing volatility insurance is expensive, because, historically, realized volatility has been well below the level of volatility implied in the price of options. In other words, there’s a volatility insurance premium.

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