Risk: Very low (stock protected)Neutral to defensiveIntermediate

Collar Strategy

Protect your stock position without paying full insurance

The collar combines an existing stock position with buying a protective put and simultaneously selling an OTM call. The short call partially or fully finances the expensive protective put (zero-cost collar). The result: your downside loss is limited (put protects), but your upside profit is capped (short call). A collar is the strategy of choice for investors who want to protect existing gains in a position.

Risk

Very low (stock protected)

Market view

Neutral to defensive

Complexity

Intermediate

Underlyings

Advantages

Clearly limited downside loss risk
Often free or cheap to implement (zero-cost collar)
No need to sell the stock position
Dividend rights are maintained (as long as not assigned)

Risks

Upside capped: strong price gains are not captured
More complex than a simple protective put
Early assignment of short call possible with US options (before dividends)
Three positions (stock + put + call) increase management complexity

Timing

When to Use

1Protect existing stock gains (e.g., position is significantly up)

2Turbulent market phases or uncertainty before specific events

3Tax optimization: protection without selling the position (controls realization timing)

4Long-term investors seeking temporary hedges

5Hedge equity compensation plans (RSUs, stock options)

65 examples

Collar Strategy on 65 underlyings

Each stock with its own example trade, strikes, premium, break-even, and interactive payoff diagram.

German & European stocks

· tradeable on Eurex

TechMedium IVIV 26–48%

IndustrialsLow IVIV 17–28%

FinanceLow IVIV 14–25%

AutoMedium IVIV 22–38%

AutoMedium IVIV 20–35%

FinanceHigh IVIV 28–55%

ConsumerMedium IVIV 22–38%

TelecomVery low IVIV 14–22%

MaterialsMedium IVIV 22–38%

IndustrialsHigh IVIV 35–60%

View example

Lufthansa

LHA.DE

IndustrialsMedium IVIV 30–45%

ConsumerHigh IVIV 35–55%

AutoMedium IVIV 25–40%

AutoMedium IVIV 25–40%

EnergyHigh IVIV 35–55%

IndustrialsLow IVIV 20–32%

EnergyLow IVIV 20–30%

EnergyMedium IVIV 25–38%

FinanceMedium IVIV 28–42%

FinanceLow IVIV 18–28%

View example

US stocks

· high options liquidity

AutoVery high IVIV 50–95%

View example

Amazon

AMZN

ConsumerMedium IVIV 25–42%

TechMedium IVIV 22–38%

TechVery high IVIV 55–90%

View example

Netflix

NFLX

ConsumerHigh IVIV 30–60%

View example

JPMorgan

JPM

FinanceMedium IVIV 20–34%

View example

Bank of America

BAC

FinanceMedium IVIV 24–40%

View example

Goldman Sachs

FinanceMedium IVIV 22–36%

View example

ExxonMobil

XOM

EnergyMedium IVIV 20–34%

View example

Coinbase

COIN

FinanceVery high IVIV 65–120%

View example

Visa

FinanceLow IVIV 16–26%

View example

Disney

DIS

ConsumerHigh IVIV 25–42%

View example

MicroStrategy

MSTR

Crypto-ProxyVery high IVIV 85–160%

View example

Novo Nordisk

NVO

ConsumerMedium IVIV 30–52%

View example

Rivian

RIVN

AutoVery high IVIV 60–100%

View example

Supermicro

SMCI

TechVery high IVIV 55–100%

View example

Rocket Lab

RKLB

IndustrialsVery high IVIV 60–110%

View example

IonQ

IONQ

TechVery high IVIV 70–130%

View example

Plug Power

PLUG

EnergyVery high IVIV 70–120%

View example

Robinhood

HOOD

FinanceHigh IVIV 45–75%

View example

Ford

AutoMedium IVIV 30–45%

View example

Boeing

IndustrialsHigh IVIV 30–50%

TechMedium IVIV 30–45%

View example

Broadcom

AVGO

TechMedium IVIV 30–45%

View example

Qualcomm

QCOM

TechMedium IVIV 30–45%

View example

Chevron

CVX

EnergyLow IVIV 22–35%

View example

GameStop

GME

ConsumerVery high IVIV 80–180%

View example

AMC

ConsumerVery high IVIV 90–200%

View example

Lucid

LCID

AutoVery high IVIV 70–120%

View example

NIO

AutoVery high IVIV 60–100%

View example

SoFi

SOFI

FinanceHigh IVIV 50–80%

View example

MARA

Crypto-ProxyVery high IVIV 80–140%

View example

Riot

RIOT

Crypto-ProxyVery high IVIV 80–140%

View example

CleanSpark

CLSK

Crypto-ProxyVery high IVIV 90–150%

View example

Index ETFs

· highest liquidity worldwide

FAQ

Frequently Asked Questions

What is the purpose of a collar strategy?

The collar primarily serves to protect an existing stock position. It limits downside losses (via the long put) at the cost of upside participation (short call caps gains). Typical use case: an investor holds a stock with 50% unrealized gain and wants to protect it without selling — a collar shields against a price decline.

Is a collar the same as a covered call?

No. A covered call consists of stock + short call — no put protection. A collar adds a long put to the covered call, providing downside protection. A covered call generates income with a modestly neutral outlook; a collar offers real protection at the cost of call premium (which is partially used to buy the put). The collar is more expensive to set up but provides significantly more protection.

How do I set up a zero-cost collar?

For a zero-cost collar, choose strikes so that the short call premium exactly covers the long put premium. In practice: buy the put at a specific strike (e.g., 5% below current price) and then find the call strike that generates an identical premium. This call strike often sits 8-12% above the current price — depending on the IV curve (skew). With strong negative skew (puts more expensive than calls), you surrender more upside.

When should I consider a collar on my stock position?

A collar is appropriate when: (a) the position is significantly in profit and you want to protect gains; (b) a turbulent market phase or specific risk event is approaching; (c) you have tax reasons not to sell the position yet; (d) you are long-term bullish but need short-term protection. A collar is less suitable if you have a neutral or bearish view on the stock.

What happens to my collar at expiration?

Three scenarios: (1) Price above short call strike → shares are sold at the call strike (assignment), but you have realized maximum profit. (2) Price between put and call strike → both options expire worthless, you keep the shares, net premium was either credit or debit. (3) Price below put strike → you can sell the shares at the put strike (protection activated), limiting your loss.

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