The approach of using a 'collar' is not appropriate when we believe there is a good chance the share price will decrease.

Name: The approach of using a 'collar' is not appropriate when we believe there is a good chance the share price will decrease.
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Question

Quizplus · Accepted Answer

A collar strategy is appropriate when there is a belief that the share price might decrease, as it involves holding the underlying asset, buying a put option to protect against downside risk, and selling a call option to offset the cost of the put.

The Approach of Using a 'Collar' Is Not Appropriate When