<p>A <a href="https://unusualwhales.com/option-strategies/collar">Collar </a>is an options strategy designed to protect downward fluctuations in the price of owned stock shares. If a trader expects large price drops in the shares they own, they can protect those shares by buying one out of the money put, and selling (or shorting) one out of the money call for every 100 shares owned. As the stock price falls, the value of this position increases as the call contract will lose money, and the put contract will gain money. This sort of position will also drastically limit profit potential on the owned shares, because as the stock price rises, the value of this type of options position will drastically drop. The setup of a Collar is similar to that of a <a href="https://unusualwhales.com/option-strategies/bearish-risk-reversal">Bearish Risk Reversal</a>.</p><h2>Related Articles</h2><ul><li><a href="https://unusualwhales.com/information/what-is-a-call-credit-spread">What is a Call Credit Spread?</a></li><li><a href="https://unusualwhales.com/information/what-is-a-spread">What is a Spread?</a></li><li><a href="https://unusualwhales.com/information/how-to-spot-and-understand-contingent-trades">How To Spot and Understand Contingent Trades</a></li><li><a href="https://unusualwhales.com/option-strategies/protective-call">What is a Protective Call?</a></li></ul>

This article breaks down a Collar options strategy, similar to Bearish Risk Reversals, and how they are used

What is a Collar?

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Theoretical Value

Book Value

Market Capitalization (Market Cap)

Mutual Fund

Par Value

Volatility Index (VIX)

Price-to-Earnings Ratio

Yield Curve

Value Stock

Treasury Note (T-Note)

Treasury Bond (T-Bond)

Treasury Bill (T-Bill)

Stock Split

Short Selling

Short Interest

Risk Tolerance

Revenue

Recession

Synthetic Short

Synthetic Long

Synthetic Position

Over-the-Counter (OTC) Market

Money Market Fund (MMF)

Stop Order

Market Order

Limit Order

Interest Rate Risk

Periscope FAQ

How To Interpret Periscope Net Gamma Exposure

Quick Custom Alert Presets

Institutional Investor

Retail Investor

IPO (Initial Public Offering)

Hedge Fund

Growth Stock

Futures Contract

Fundamental Analysis

Technical Analysis

Float

Short Squeeze

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