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    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-
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    Another protective strategy that allows for some upside capital
    gain while providing maximum down side protection is the collar.

    The collar is a combination of the covered call and protective
    put strategies. The collar uses a long put position in
    coordination with a short call position along with a long stock
    position. The ratio is one short call, one long put (not of the
    same strike) and 100 shares of stock.

    As you remember, one contract is equal to 100 shares. The
    options that we will use to construct this strategy will be
    out-of-the-money puts and calls.

    The object here is to construct a protective put strategy
    without having to pay for the purchase of the put. We talked
    about premium in the covered call strategy and how we are better
    off collecting premiums over a period of time, not paying them
    out. By selling the call, we collect premium which can be used
    to offset the capital outlay we incurred for the put purchase.

    We said that two of three scenarios in the covered call strategy
    were positive while the protective put scenario had only one
    scenario that produced a positive outcome.
    However, the protective put was the strategy that provided the
    most downside protection. The challenge was to construct a
    protective put strategy without paying out money. The solution
    is the collar strategy.

    The collar takes on the characteristics of both the protective
    put and covered call strategies. Like the covered call, there is
    an upside cap on profits and like the protective put there is
    unlimited downside protection.

    Ideally, the collar is set up to be an “even” trade meaning you
    neither receive nor pay out any money. Realistically, depending
    on the options used, you may have to pay out a small premium or
    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-t
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    one contract is equal to 100 shares. The
    options that we will use to construct this strategy will be
    out-of-the-money puts and calls.

    The object here is to construct a protective put strategy
    without having to pay for the purchase of the put. We talked
    about premium in the covered call strategy and how we are better
    off collecting premiums over a period of time, not paying them
    out. By selling the call, we collect premium which can be used
    to offset the capital outlay we incurred for the put purchase.

    We said that two of three scenarios in the covered call strategy
    were positive while the protective put scenario had only one
    scenario that produced a positive outcome.
    However, the protective put was the strategy that provided the
    most downside protection. The challenge was to construct a
    protective put strategy without paying out money. The solution
    is the collar strategy.

    The collar takes on the characteristics of both the protective
    put and covered call strategies. Like the covered call, there is
    an upside cap on profits and like the protective put there is
    unlimited downside protection.

    Ideally, the collar is set up to be an “even” trade meaning you
    neither receive nor pay out any money. Realistically, depending
    on the options used, you may have to pay out a small premium or
    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-
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    be used
    to offset the capital outlay we incurred for the put purchase.

    We said that two of three scenarios in the covered call strategy
    were positive while the protective put scenario had only one
    scenario that produced a positive outcome.
    However, the protective put was the strategy that provided the
    most downside protection. The challenge was to construct a
    protective put strategy without paying out money. The solution
    is the collar strategy.

    The collar takes on the characteristics of both the protective
    put and covered call strategies. Like the covered call, there is
    an upside cap on profits and like the protective put there is
    unlimited downside protection.

    Ideally, the collar is set up to be an “even” trade meaning you
    neither receive nor pay out any money. Realistically, depending
    on the options used, you may have to pay out a small premium or
    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-
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    e collar strategy.

    The collar takes on the characteristics of both the protective
    put and covered call strategies. Like the covered call, there is
    an upside cap on profits and like the protective put there is
    unlimited downside protection.

    Ideally, the collar is set up to be an “even” trade meaning you
    neither receive nor pay out any money. Realistically, depending
    on the options used, you may have to pay out a small premium or
    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-
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    r
    even receive a small premium but the goal of the collar in terms
    of premium is to be neutral.

    As mentioned previously, to construct a collar, just buy one
    out-of-the-money put and sell one out-of-the-money call per
    every 100 shares of stock owned.

    Obviously, the put and the call must be of differing strikes (it
    is impossible for a put and a call of identical strike price to
    both to be out-of-the-money or both to be in-the-money).

    For example, with a stock priced at $28.50 a collar may be
    constructed by the purchase of the December 27.5 puts and the
    sale of the December 30 calls. Hopefully, the price of the call
    and put are close enough so that the funds generated by the sale
    of the call are enough to offset the cost of the put purchase.

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