Financial TermsFinancial Planning Due Diligence Model Portfolio Liquid Assets Market Risk Flexible Exchange Rate System
Collar
A collar is a risk management technique used to protect against excessive losses while also capping potential gains. This is achieved by simultaneously purchasing a protective put and selling a covered call option. The protective put acts as a safeguard against market downturns, while the covered call generates income from the sale of the call option. In this way, the collar strategy aims to strike a balance between risk and reward in the world of finance.
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