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Collar

oboloo Glossary

Collar

The ‘Collar’ term in investing and finance refers to a defensive investment strategy used by investors who want to manage risk exposure. In a collar, an investor purchases put options at a specific strike price and simultaneously sells call options at a higher strike price. Through this strategy, the investor is essentially creating a ‘collar’ that helps protect their stock from falling below a certain price limit and limits potential returns if the stock rises above a certain price. Collaring allows investors to have more control over their investments without incurring too much additional cost.

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