## 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 **not**include 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.

### Step 10: Option Premium

The proceeds you expect to receive from selling the covered call to open the short option position and the cost of long put option you will be buying. Use the current "bid" price as a starting point for the call and the "ask" price as a starting point for the put. By default, the calculator loads the end of day data from the previous trading session.

### Step 11: Margin Interest Rate (%)

This is the annual percentage rate charged for margin loans. Consult with your broker to determine what rate they will charge for a margin loan. Buying on margin entails additional risks and not all accounts are approved for margin. The calculator retrieves results for purchases paid for in full and for purchases on margin. For margin purchases, the calculator assumes a 50% initial deposit less premiums received from the covered call.

### Step 12: "Comm. type" and "Comm. amount"

Similar to step 5. This is the commission charged for the options only, not the stock position. Selecting "Total" means the total amount of commissions to be assessed. Selecting "Rate" means a commission rate **per share** of the underlying security, **not** a per contract rate. For example, if 10 contracts are traded covering 1000 shares, and the "rate" was $1.00, the commission for the options would be $1,000.