Short Put & Long Call (Collar)


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

Margin Requirement

Yes, pay the difference in premiums and post variable margin on the put similar to futures in a falling market


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


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

When to Apply

  • If market outlook is bullish, but flexibility to benefit from partial decline in prices is necessary or desirable
  • If upside risk is undefined or hard to define
  • In a neutral implied volatility environment
  • To adjust a long call or call spread after a decline in price

Potential Adjustment

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