Glossary term
Collar
A defined-range options position combining long stock, a long protective put, and a short covered call to cap both downside and upside.
A Collar is a defined-range position combining long stock, a long protective put below the price, and a short call above it. The short call premium finances some or all of the put cost, often producing a near-zero-cost hedge in exchange for capping upside. Collars are used to protect a concentrated or appreciated stock position through an uncertain window. See Cash-Secured Puts 101.