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That sounds amazing. Could you explain how you set up your hedge, and why it doesn't cost you anything? I'm just starting to learn about option strategies.

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Basic strategy (there are others): I own stocks in 100 chunk blocks. I then buy the exact same amount of -15-20% puts to cover my downside risk and simultaneously sell the same amount of ~+10-20% calls and use their premium to make the insurance free.

My portfolio value, if hedged perfectly and fully backed with cash is now locked to +/- ~20% (depending on IV) at little to no cost.

More here: http://www.investopedia.com/articles/optioninvestor/09/asset... || http://www.theoptionsguide.com/the-collar-strategy.aspx || http://www.theoptionsguide.com/costless-collar.aspx || http://www.advisorperspectives.com/newsletters10/Risk_Manage...

Mark Cuban used this to stay a billionaire through the dot-com crash: https://www.quora.com/How-did-Mark-Cuban-survive-the-dot-com...

But from you other posts it sounds like your expecting greater than 20% growth.

I'd just worry 20% growth could happen fairly quickly.

That's what we in finance call a good problem to have.

TSLA Puts seem to be priced with higher IV than Calls at the same distance for both near and far expiries (Calls at 120% vs. Puts at 80% of spot). I see Puts at strike $27 priced at 200% to 166% of the Calls at strike $41.

Options chains from Google Finance : http://www.google.com/finance/option_chain?q=NASDAQ:TSLA&...

So I'm assuming that the TSLA collar (unlike your other equity collars) is not costless. Or is it? Am I missing something?

Thanks for sharing your thoughts, BTW. I'm just loving going through your comments on other HN articles!

Yeh that's why I said ~15-20% - it varies with IV, I just take a different spread than exactly +/- 20%. Fundamentally I don't want to be exposed to black swan downside, and black swan upside is statistically rare - so I don't mind losing that (things don't move up 30-40% in a month too often - manias/booms are slow - but they have moved down 30-40% crashes/panics -> bull markets are slow, bear markets are fast - and that is the asymmetry I'm exploiting to cap my risk without negatively effecting my return - selling covered calls is effectively free money most of the time, and buying puts covers my ass from Enron like events and the asymmetrical movement between booms/busts/disclosure negative information like bankruptcy).

Thanks! Yes, (in my 4 years of trading experience,) I've only seen pharma stocks move up 30-40% in a month (or day!).

This is incredibly fascinating to read. Thanks for the links and insight.

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