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 to lock in a price range, and the premium received from selling the call is used to offset the cost of buying the put.

A Collar with a Net Outlay of Approximately Zero Is