1 - A strategy to reduce a position's exposure to market fluctuations, while still retaining ownership of the position within a preset range.

The collar is created by simultaneously buying an out- of-the-money put option and selling (writing) an out-of-the-money call option on the underlying asset. That way one's exposure to the market is restricted to the range of the collar.

Take the example below where a trader has one share trading at $50. The trader buys a put at $40, and writes a call option at $60.

Call Option	Market Trades to $60	Call is exersized, and position is sold at $60
	Market Stays Within Range	Trader retains control of the share
Put Option	Market Trades to $40	Put is exorsized, and positino is sold at $40

Should the market trade out of the $60 to $40 range, one of the options will be exorcized closing the position.

Why do this? Why do this instead of just turning to a stop and limit order? The goal of this strategy is to retain control of the asset while the position reaches the upper strike price. A trader might do this to retain voting rights, or she may do this after the position has already driven up substantially, already reaching the profit target. Because the collar involves selling a far out of the money call, it means the cost of buying the put and closing the position may be offset by the income from selling the call option. Where simply having a stop-loss & limit order would involve additional fees the trader may be unable to avoid.



2 - The lowest rate acceptable to a buyer of bonds.

3 - The lowest price acceptable to the issuer of an underwriting.

4 - The lowest rate possible for an adjustable rate.