zero-cost collar


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Zero Cost Collar

An investment strategy in which one buys or sells one position while taking an opposite position for the same price that will limit both the return and the risk of one's investment. An investor sells a position that caps return while buying one that limits loss, while a borrower does the opposite. A zero-cost collar may be used for options, stocks, interest rates, or commodities. See also: Collar.

zero-cost collar

The investment position of being short a call option and long a put option for stock already owned. The premium received from selling the call option is used to pay for purchase of the put. The collar is designed to protect an investor against a decline in the price of the stock without the investor being required to sell the stock and pay a tax on capital gains.
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We begin with 481 individual zero-cost collar transactions and 983 prepaid forward sale contracts from 1996 to 2006.
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)
For investors comfortable with relinquishing a stock's potential growth and dividends in exchange for downside protection at no cost, a zero-cost collar may be the best approach.
By using a zero-cost collar, investors who do not need diversification can be protected against up-and-down market movement.
In February 2006, Celadon's Chairman and CEO, Steve Russell, entered into a two-year, zero-cost collar arrangement.
In July, we entered into an agreement for a zero-cost collar on 1,000 barrels a day of oil production with a floor of $65.
7 million related to the termination and settlement of $150 million of our interest rate zero-cost collar and the write off of deferred financing costs of $2.
The Securities and Exchange Commission requires insiders to report their purchases of zero-cost collars and similar derivatives.
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.