MM58 - Is it Too Late to Collar
Today I want to talk about something that keeps coming up, and I want to say up front, this is not financial advice. I am not a CPA and I am not a trading advisor.
Here is the theme I keep hearing. I am concerned about giving back all my profit on my AI stocks. It has come up on Astera Labs. I have heard it on Marvell. Not quite as much on Micron, though I think that is only because fewer of you were in it. Either way, we need to touch on this again.
I will be honest with you. This is a slightly tougher lesson and a tougher conversation than usual. But there is still a lot you can do and a lot you can learn, so let's move forward from here.
Let's look at Astera Labs. I have a split screen up. On the left is a 15 minute chart on regular trading hours. On the right is my 4 hour chart on extended hours. When we were rallying and running like crazy, we ran all the way to 495.
When you are up there, and everything feels euphoric, it is very easy to not think ahead. Nobody stops to ask, how will I feel if this goes the other way? I always ask that. You all know I am a plan B person.
So when you get a rally like that, you have choices. And this is where most people pick the wrong tool.
Your three choices at the top
Choice one is you sell calls. Now here is where people get this confused. When you sell a call and you bring in a 40 or 50 dollar credit on a stock trading at 500, it is not that it is not a lot of money. It is, but Itβs not a lot of money against what this stock can actually do. Astera Labs fell 185 dollars this correction and it could easily cut in half.
So selling a call up there is an income strategy. It is not a hedging strategy. Those are two different concepts and I want you to see that they are the same thing. I go through this distinction in detail in Course 202.
Choice two is a true hedge. That is when you sell the call, you take that premium, and you use it to buy the put. The put is what actually puts a floor underneath the market and truly protects your portfolio. The call pays for the protection. The put is the protection.
Choice three is what I actually deployed. I sold all of my March 2027 Astera Labs calls and I held my longer term positions.
All three are viable. It just depends on who you are and what you need to accomplish.
So here we are today: