Risk glossary

 

Collar

1) A supply contract between a buyer and a seller of a commodity, whereby the buyer is assured that he will not have to pay more than some maximum price and whereby the seller is assured of receiving some minimum price.

2) An option strategy consisting of a put option and a call option with different strike prices. The buyer is assured of selling at no less than the floor, and buying at no less than the cap strike price.

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