Stock Collars - Basic Hedge Investing
Note: While this feature is supported by Future Financiers, not all events offer this feature. Please confirm with the event host before adopting a team strategy.
A Stop-Loss is a defensive position - it serves to protect against loss. However it does not "lock in" gains.
You can purchase a stock for $20 with a Stop-Loss of $15, however if the stock rises to $30 then drops back to $20, unless you sold at $30, there was no real gain, since gains or losses are only realized when the stock is actually sold.
A collar protects profits while also minimizing losses. When a stock is "collared", it is automatically sold when the price rises by 10% or drops by 5%. Until one of those limits is reached, it remains in a team's portfolio.
This "locks in" your profit by automatically selling when the gain is 10%, or stops your loss by automatically selling when the loss is 5%.