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Collar Strategy

Combining a Protective Put and a Covered Call on the same shares — caps both upside and downside within a defined range, often at reduced net premium cost.

A collar combines owning shares, buying a protective Put, and selling a covered Call on the same shares simultaneously — capping both upside (via the sold Call) and downside (via the bought Put) within a defined range, often at reduced or near-zero net premium cost, since the Call premium collected can offset the Put premium paid.

See the individual components — Covered Call and Protective Put — in Covered Call Strategy Explained With Example and Protective Put Strategy: How to Insure Your Stock Portfolio.