Long Put & Short Call


Sell a Call Option, Buy a Put Option (Bearish Collar)

Margin Requirement

Yes, pay the difference in premiums and post variable margin on the short call similar to futures in a rising market


  • Establishes a Minimum futures price
  • Cost of Put is reduced by selling the Call
  • Flexible, offset at any time


  • Limited benefit from higher futures price
  • Capital expense of potential margin exposure
  • Offsetting before expiration will change the cost & P/L (advantage in lower market, disadvantage in higher market)

When to Apply

  • If market outlook is bearish, but flexibility to benefit from partial increase in prices is necessary or desirable
  • If downside risk is undefined or hard to define
  • In a neutral implied volatility environment
  • To adjust a long put or put spread after an increase in price

Potential Adjustment

  • In a rising market, roll up long put option to capture benefit from increase in price and/or roll up short call option to extend range of opportunity to benefit from rising prices
  • In a falling market, buy back short call option to capture decay in premium, roll down long put option to capture drop in price, and/or sell lower strike put option to generate additional credit