Stock Collar - A Conservative Strategy
A collar is a conservative investment strategy. Investors who use this approach are hoping to realize many moderate gains while avoiding significant losses.
To use a football metaphor, this is a "short pass" approach. Instead of throwing deep downfield which has a greater risk (an incomplete pass, or worse, an interception) but greater reward (the ball is caught for a big gain), the team moves down the field using a safer approach, throwing passes with less risk (fewer incomplete passes and lower chance of interception) and lower reward (the ball is caught more often, but for smaller gains).
The stock collar is not for everyone - but it is a strategic option in managing an investment portfolio.