# Collar

> Will you accept a hard ceiling in exchange for a hard floor?

| Property | Value |
| --- | --- |
| Market phase | Range-bound, no trend, price oscillating between levels, Big move expected, direction unknown (event, coiling at the edge of a range), Clear downtrend or an outright crash |
| Driver | Delta - you get paid because price moves your way, Theta - you get paid because time passes and premium decays |
| Direction | neutral, capital preservation |
| Max profit | (the call strike minus your cost basis) plus (the credit received minus the debit paid) |
| Max loss | (your cost basis minus the put strike) minus (the credit received minus the debit paid) |
| Risk defined | Yes |
| Legs | +100 shares; +1 Put @Kp; -1 Call @Kc |
| Approval level | 1 (Covered positions (covered call, protective put) - the lowest approval tier) |
| Experience | Intermediate |

## Formulas

```text
Break-even: S0 - (C - D)
Max profit: (Kc - S0) + (C - D)
Max loss: (S0 - Kp) - (C - D)
```

## Legs

1. +100 shares
2. +1 Put @Kp
3. -1 Call @Kc

[Read this strategy on the web](https://www.mindtrajour.com/en/academy/strategies/collar)