How do I filter out read items in a collection in Kindle?

At the risk of suggesting the obvious, why not create a collection called Already Read and move the item from your current collection to this one?

I realize that Oasis is e-ink, but on the Kindle app for android, moving things from one collection to another is relatively easy. The key thing is after you move it to this collection is (if you want this) to remove the ebook from that device. That allows the ebook to remain on the cloud while saving space on your device. ON my android app, book covers for files which are available on the Cloud but deleted on the device still show up -- so you never forget they are there.

If you are worried about making a mistake, you can move collections using the Content & Devices web page.