Protecting Unrealized Stock Profits: The Collar Strategy Explained and Demonstrated

Getting Started with Options | Cameron May | 10-21-25
Characteristics and Risks of Standardized Options. https://bit.ly/2v9tH6D

In this video, “Protecting Unrealized Stock Profits: The Collar Strategy Explained and Demonstrated,” Schwab Education Senior Manager Cameron May will explore how some traders might use the collar option strategy to safeguard gains on a profitable stock position. When a stock has experienced strong upward movement, protecting those unrealized profits often becomes a key consideration, especially in uncertain markets. Using the thinkorswim desktop trading platform, Cameron will demonstrate how a trader might build a collar position step by step, pairing a protective put with a covered call to limit downside risk while also setting a ceiling on potential upside.

You’ll learn how a trader might evaluate the trade-offs of this approach, including how the collar can provide peace of mind by reducing exposure to sudden declines, but also how it caps further profit potential while the position is in place. Cameron will discuss how a trader might select expiration dates and strike prices for both the call and put legs of the trade, and he’ll finish by planning and placing an example collar order in real time. Whether you’re a beginner looking to understand how this strategy works or an investor exploring ways to defend recent gains, this video offers a clear, practical example walkthrough of the collar strategy in action.

Each of these weekly webcasts is carefully structured to help new option traders along the leverage learning curve. Your education coach will introduce you to options terminology, clarify the common opportunities and risks, and explain the associated rights and obligations to help you become more confident with your understanding of options trading.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction.

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