What is a collar option trade?

A collar option trade is less bearish than buying puts outright, but it protects a trader from large losses. Also, selling the upside call helps finance the protective position. A collar option strategy limits risk beyond the protective put’s strike. Even if a stock price goes to zero, the trader’s loss maxes out at the protective put’s strike.

What is the ironed collar options strategy?

The ironed collar options strategy is a variant of the basic collar options strategy that involves purchasing two put options with different strike prices and a call option. This strategy protects against downside risk while allowing the investor to benefit from potential upside gains.

What is a collar strategy?

A collar is an options strategy used by traders to protect themselves against heavy losses. The strategy, also known as a hedge wrapper, involves taking a long position in an underlying stock, buying an out-of-the-money put, and selling an out-of-the-money call.

What is a synthetic collar option?

The synthetic collar is an options trading strategy that involves the simultaneous purchase of a long call option and the sale of a short put option at the same strike price, creating a synthetic long position in the underlying asset.