The most common derivative instruments used by insiders are: 1) prepaid variable forwards (forwards), 2) zero-cost collars (collars), 3) exchange funds, and 4) equity swaps.
Zero-Cost Collars (Collars) and Prepaid Variable Forward Contracts (Forwards)
Lemmon, 2001, "Managerial Ownership, Incentive Contracting, and the Use of Zero-Cost Collars and Equity Swaps by Corporate Insiders," Journal of Financial and Quantitative Analysis 36, 345-370.
Percentage of Ownership and Dollar Amount Covered by Each Derivative Security Percentage of Ownership Invested N Mean Median Zero-Cost Collars 227 31.
Capstone") (TSX: CS) today announced that it has entered into zero-cost collars
for 36,000 tonnes of copper production between now and September 30, 2015 (with pricing periods from June 2015 to February 2016) at a minimum of US$2.
In August 2009, the Company entered into agreements for two zero-cost collars
for 2010, the first on 5,000 MMBtu of natural gas per day with a $4.
Berry Petroleum Company (NYSE:BRY) has entered into zero-cost collars
for approximately 10,000 barrels of oil per day for the period January 1, 2006 through December 31, 2009.
468 per pound) exceeding the ceiling of our 2005 zero-cost collars ($1.
The unrealized losses for our 2005 zero-cost collars were based on a projected full-year average LME futures price (including actual monthly average LME prices for the 2005 first quarter) at March 31, 2005, compared with the average LME call protection price per pound of $1.
Primarily due to this significant price movement, the Company has hedged approximately one third of its crude oil production for the next 12 months using zero-cost collars
to lock-in attractive profitability on those barrels and partially protect the Company from a near-term price decline.