Glossary · Options

Collar

Owning shares, buying a put below and selling a call above to pay for it.

Why it matters

A floor and a ceiling for close to zero cost. Skew often makes the put affordable.

How to read it

Common for protecting a big gain without selling.

Related

Protective putBuying a put on shares you own to set a floor under losses.Covered callOwning 100 shares and selling a call against them for income.SkewHow much more out of the money puts cost than calls, in volatility terms.

In the Cluenex app, this explanation opens next to every collar figure, with the live reading for the stock you are looking at. Open it in Cluenex