Negative cost collar

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Revision as of 15:51, 21 August 2013 by imported>Doug Williamson (Spacing 21/8/13)
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Risk management.

A type of options hedging structure in which the net premium payable by the hedger is negative.

In other words, the net premium is an amount receivable by the hedger.

The provider's profit - and the true cost to the hedger - is embedded within the related strike prices of the options from which the collar is constructed.


See also