Zero Cost Collar

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.
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During the quarter, the AGM entered into a zero cost collar gold hedging program with a group of leading commercial banks to manage the AGM's exposure to gold price risk.
At February 12, 2018, the copper sales hedge program consisted of 66,500 tonnes of unsettled and unmargined copper forward sales contracts at an average price of $2.63 per pound with periods of maturity to September 2018, zero cost collar unmargined sales contracts for 120,000 tonnes at a spread of $2.56 per pound to $3.44 per pound with maturities to December 2018.
A popular type of collar is the zero cost collar. Typically, the proceeds from the sale of the call are used to offset the cost of the put, which eliminates the cost of the hedging instrument.
The company will enter into a fence structure - zero cost collar - for around 300,000 gold ounces, representing around 20% of Burnstone's production during the loan term, with lenders to provide a cost effective hedging structure required by the facilities.