Maximum loss on a collar
You own stock bought at $50 and wrap it in a collar: buy a $45-strike put for $2 and sell a $55-strike call for $2 (same expiry). What is the maximum possible loss on the whole position at expiry, in dollars per share?
Show hints (2)+
- The long put sets a floor; the worst case is the stock at the put strike.
- Max loss , and net premium .
Answer
Reveal answer →Final answer
5
Create a free account to see the full worked solution and track your progress.
Interview format: Betting Game Rounds, Options Trading