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
30
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)
240 examples
Collar Strategy on 30 underlyings
Each stock with its own example trade, strikes, premium, break-even, and interactive payoff diagram.
German & European stocks
· tradeable on Eurex
SAP
SAP
TechLow IVIV 18–30%
View example
ASML
ASML
TechMedium IVIV 26–48%
View example
Siemens
SIE.DE
IndustrialsLow IVIV 17–28%
View example
Allianz
ALV.DE
FinanceLow IVIV 14–25%
View example
BMW
BMW.DE
AutoMedium IVIV 22–38%
View example
Mercedes
MBG.DE
AutoMedium IVIV 20–35%
View example
Deutsche Bank
DBK.DE
FinanceHigh IVIV 28–55%
View example
Adidas
ADS.DE
ConsumerMedium IVIV 22–38%
View example
Deutsche Telekom
DTE.DE
TelecomVery low IVIV 14–22%
View example
BASF
BAS.DE
MaterialsMedium IVIV 22–38%
View example
US stocks
· high options liquidity
Apple
AAPL
TechLow IVIV 20–32%
View example
NVIDIA
NVDA
TechHigh IVIV 40–80%
View example
Tesla
TSLA
AutoVery high IVIV 50–95%
View example
Amazon
AMZN
ConsumerMedium IVIV 25–42%
View example
Meta
META
TechHigh IVIV 28–55%
View example
Microsoft
MSFT
TechLow IVIV 18–30%
View example
Alphabet
GOOGL
TechMedium IVIV 22–38%
View example
AMD
AMD
TechHigh IVIV 40–70%
View example
Palantir
PLTR
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
GS
FinanceMedium IVIV 22–36%
View example
ExxonMobil
XOM
EnergyMedium IVIV 20–34%
View example
Coinbase
COIN
FinanceVery high IVIV 65–120%
View example
Visa
V
FinanceLow IVIV 16–26%
View example
Disney
DIS
ConsumerHigh IVIV 25–42%
View example
MicroStrategy
MSTR
Crypto-ProxyVery high IVIV 85–160%
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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