Collar calculator: protect shares with a put and a call
Own shares you're scared to lose? A collar puts a floor under them and a ceiling over them. See what it costs, the worst and best case, and what a crash would do.
| Stock price at expiry | Shares alone | With the collar |
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How it works: a collar is three pieces. You own the shares. You buy a put, which lets you sell at the put strike no matter how far the stock falls. You sell a call, which pays you a premium but means you sell at the call strike if the stock rises past it. Net cost = put cost − call premium (a minus number is a credit). At expiry, the price you end up with is the stock price, but never below the put strike and never above the call strike. Your result = (that price − what you paid − the net cost) × shares. Expiry only, fees left out.
The floor still sits below what you paid
A collar doesn't stop a loss. It stops a big loss. If the put strike is under your cost, the worst case is still a loss. It's just a loss you chose ahead of time. Look at the crash row. The shares alone lose a lot. The collar loses the same small amount it would have lost on a mild dip. That is the whole deal: you give up the top to protect the bottom. The covered call vs collar guide shows when that trade is worth it.
Where the collar fits next to the wheel
A covered call is a collar without the put. You keep the premium but you have no floor. The collar costs some of that premium to buy one. People reach for it when they sit on shares they don't want to sell yet, like before earnings or after a big run. In the wheel strategy, the call side works the same way. The put is the new part: it is insurance with an end date.
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