The Collar Strategy is a hedging technique used to protect an investment by limiting both potential gains and losses. It involves holding a long position in a stock while simultaneously selling an out-of-the-money call and purchasing an out-of-the-money put.
This strategy allows investors to safeguard against significant losses if the stock price falls, while also capping the upside potential. It’s commonly used by those who want to secure profits while mitigating risk in volatile markets.
