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Collar
A collar is executed against a stock position with the goal of limitied the potential downside without spending much in option premium.
A collar begins by buying a protective put option and then sells a covered call in order to pay for the protective put. The entire collar is usually done for little or no net premium while the collar may actually generate a small amount of net premium.
Since a collar is selling a covered call ownership of the underlying stock is necessary.
See the OptionMath.com Collar Cheat Sheet
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A collar is executed against a stock position with the goal of limitied the potential downside without spending much in option premium. A collar begins by buying a protective put option and then sells a covered call in order to pay for the protective put. The entire collar is usually done for little or no net premium while the collar may actually generate a small amount of net premium. Since a collar is selling a covered call ownership of the underlying stock is necessary. See the OptionMath.com Collar Cheat Sheet
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