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7.1. Collar

ProficiencyDirectionVolatilityAsset LegsMax RiskMax RewardStrategy Type
N/A+
    +   
IntermediateBullish • Long StockCappedCappedCapital Gain
   • Long Put   
   • Short Call   


7.1.1. Description

The Collar is similar to a Covered Call but typically works over a much longer time period and involves another leg—buying a put to insure against the stock falling. The effect is of buying a stock, insuring against a down-move by buying puts, and then insuring the trade by selling calls.


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