Groundlearn / Glossary / Collar
Collar
A CFA term, defined in plain English with the distinction examiners test.
What it means
Holding the underlying, buying a put and writing a call, bounding the outcome between a floor and a cap.
The exam angle
A zero-cost collar chooses strikes so the premiums offset. Nothing is free — the cost is the upside given away.
Where it appears in the syllabus
- Derivatives & Risk ManagementCFA Level III · exam weight 10–15% · Options strategies, swaps/forwards/futures strategies, currency management.
Related terms
- Covered callHolding the underlying and writing a call against it, collecting the premium in exchange for capping the upside.
- Currency hedgingUsing forwards, futures or options to reduce a portfolio’s exposure to exchange rate movements on foreign assets.
- Derivatives overlayAdjusting a portfolio’s exposures with derivatives while leaving the underlying holdings untouched.
- Protective putHolding the underlying and buying a put, which sets a floor under the position at the cost of the premium.
- StraddleBuying a call and a put at the same strike and expiry — a position on the size of a move rather than its direction.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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