A collar with a net outlay of approximately zero is an options strategy that
A) combines a put and a call to lock in a price range for a security.
B) uses the gains from sale of a call to purchase a put.
C) uses the gains from sale of a put to purchase a call.
D) both a and b.
E) both a and c.

Question

Quizplus · Accepted Answer

A collar strategy involves buying a put option and selling a call option. The premium received from selling the call is used to offset the cost of buying the put, resulting in a net outlay of approximately zero.

A Collar with a Net Outlay of Approximately Zero Is