What is a collar contract?

What is a collar contract?

What Is a Collar Agreement? Generically, a “collar” is a popular financial strategy to limit an uncertain variable’s potential outcomes to an acceptable range or band. In business and investments, a collar agreement is a common technique to “hedge” risks or lock-in a given range of possible return outcomes.

What is collar trade?

A collar is an options strategy that involves buying a downside put and selling an upside call that is implemented to protect against large losses, but which also limits large upside gains. The protective collar strategy involves two strategies known as a protective put and covered call.

What is a collar in an acquisition?

A mechanism used in mergers to protect parties against certain risks associated with market fluctuations when a buyer’s stock comprises all or part of the merger consideration.

How do collars work?

A collar position is created by holding an underlying stock, buying an out of the money put option, and selling an out of the money call option. Collars may be used when investors want to hedge a long position in the underlying asset from short-term downside risk.

What is ironed collar strategy?

Definition: The Collar Options strategy involves holding of shares of an underlying security while simultaneously buying protective Puts and writing Call options for the same underlying. It is technically identical to the Covered Call Strategy with the cushion of a Protective Put.

What is a collar in engineering?

The shaft collar is a simple, yet important, machine component found in many power transmission applications, most notably motors and gearboxes. The collars are used as mechanical stops, locating components, and bearing faces.

What is a collar in sewing?

In clothing, a collar is the part of a shirt, dress, coat or blouse that fastens around or frames the neck.

What is a collar in law?

What is a collar in legal terms?

Collar means an agreement to receive payments as the buyer of an option, cap, or floor and to make payments as the seller of a different option, cap, or floor.