Short Collar
Options strategy · Level 2 · Long options & hedges
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The collar for a short seller: short stock, buy a call above for protection, sell a put below to pay for it.
Where Tradecraft teaches it
Level 2 · Long options & hedges, in the lesson “Collars and short collars”: Sell upside you don’t need to pay for downside protection you do.
Related terms
- Covered PutThe mirror of a covered call: you are short 100 shares and sell a put below.
- Protective CallShort 100 shares and buy a call as insurance.
- CollarOwn the stock, buy a put below and sell a call above.
- Put skewThe usual pattern in equity and index options: OTM puts trade at higher implied volatility than equally distant OTM calls, making downside…
- Zero-cost collarStock hedge where the premium from a sold OTM call fully pays for a bought OTM put: no upfront outlay, but you give up all upside above the call…
- ConversionLong stock + long put + short call, same strike and expiry.