Collar hedge - Revision history

imported>Doug Williamson: Add links.

2022-07-06T23:58:52Z

Add links.

← Older revision		Revision as of 23:58, 6 July 2022
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	* [[Cap]]		* [[Cap]]
	* [[Floor]]		* [[Floor]]
			* [[Hedge ]]
			* [[Hedge accounting]]
			* [[Hedging]]
	* [[Interest rate collar]]		* [[Interest rate collar]]
	* [[Negative cost collar]]		* [[Negative cost collar]]

imported>Doug Williamson: Add category.

2020-10-07T14:36:10Z

Add category.

← Older revision		Revision as of 14:36, 7 October 2020
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	* [[Positive cost collar]]		* [[Positive cost collar]]
	* [[Zero cost]]		* [[Zero cost]]

			[[Category:Manage_risks]]

imported>Doug Williamson: Layout.

2016-08-05T17:39:23Z

Layout.

← Older revision		Revision as of 17:39, 5 August 2016
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	<i>Risk management</i>.		<i>Risk management</i>.


	1.		1.

imported>Doug Williamson: Layout.

2016-05-11T11:09:14Z

Layout.

← Older revision		Revision as of 11:09, 11 May 2016
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	<i>Risk management</i>.		<i>Risk management</i>.


	1.		1.
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	Collar hedges are more complex structures, compared with a simpler cap option or floor option.		Collar hedges are more complex structures, compared with a simpler cap option or floor option.

	An advantage of collars for hedging is that they reduce the net premium paid for the hedge. They do this by adding a short option position to the long position in the simple cap or floor. In other words the hedger <i>sells</i> an option (in addition to <i>buying</i> the simple cap or floor option).		An advantage of collars for hedging is that they reduce the net premium paid for the hedge. They do this by adding a short option position to the long position in the simple cap or floor.

			In other words the hedger <i>sells</i> an option (in addition to <i>buying</i> the simple cap or floor option).


	The premium received by the hedger reduces their net premium payable. The net premium payable is often zero. (This arrangement is called a <i>zero cost</i> collar.)		The premium received by the hedger reduces their net premium payable. The net premium payable is often zero. (This arrangement is called a <i>zero cost</i> collar.)

	It is also possible - though less common - to construct a <i>negative cost</i> collar, the net premium being <i>receivable</i> by the hedger.		It is also possible - though less common - to construct a <i>negative cost</i> collar, the net premium being <i>receivable</i> by the hedger.


	The case where the hedger <i>pays</i> a net premium for the collar is known as a <i>positive cost</i> collar.		The case where the hedger <i>pays</i> a net premium for the collar is known as a <i>positive cost</i> collar.
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	The net hedged profile achieved by the use of the two options, in combination with the underlying exposure.		The net hedged profile achieved by the use of the two options, in combination with the underlying exposure.


	== See also ==		== See also ==

imported>Doug Williamson: Align with qualifications material.

2015-08-01T08:45:57Z

Align with qualifications material.

← Older revision		Revision as of 08:45, 1 August 2015
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	''Risk management''.		<i>Risk management</i>.

	~~A form of hedge using options~~.		1.

			Two options used in combination as a hedge for an underlying exposure to a market price.
	Collar hedges are more complex structures, compared with a simpler cap option or floor option.		Collar hedges are more complex structures, compared with a simpler cap option or floor option.

	An advantage of collars is that they ~~can~~ reduce the net premium paid for the hedge. They do this by adding a short option position to the simple cap or floor. In other words by the ~~corporate~~ hedger ~~''selling''~~ an option (in addition to ''buying'' the simple cap or floor option).		An advantage of collars for hedging is that they reduce the net premium paid for the hedge. They do this by adding a short option position to the long position in the simple cap or floor. In other words the hedger <i>sells</i> an option (in addition to <i>buying</i> the simple cap or floor option).

	The premium received by the ~~corporate~~ reduces their net premium payable. The net premium payable is often zero. (This arrangement is called a ''zero cost'' collar.)		The premium received by the hedger reduces their net premium payable. The net premium payable is often zero. (This arrangement is called a <i>zero cost</i> collar.)

	It is also possible - though less common - to construct a ''negative cost'' collar, the net premium being ''receivable'' by the ~~corporate~~.		It is also possible - though less common - to construct a <i>negative cost</i> collar, the net premium being <i>receivable</i> by the hedger.

	The case where the ~~corporate~~ hedger ''pays'' a net premium for the collar is known as a ''positive cost'' collar.		The case where the hedger <i>pays</i> a net premium for the collar is known as a <i>positive cost</i> collar.

	~~In all cases,~~ the ~~net result and intention~~ is to ‘collar’ the all-in hedged ~~rate~~ achieved within a range which is acceptable to the ~~hedging corporate~~.		The result of dealing in the combination of two options as a hedge is to ‘collar’ the all-in hedged expense or income achieved within a range which is acceptable to the hedger.

	Collars are also known as ''cylinders'', ''corridors'' or ''range forwards''.		Collars are also known as <i>cylinders</i>, <i>corridors</i> or <i>range forwards</i>.


			2.

			The net hedged profile achieved by the use of the two options, in combination with the underlying exposure.

	== See also ==		== See also ==
	* [[Cap]]		* [[Cap]]
	* [[Floor]]		* [[Floor]]
			* [[Interest rate collar]]
	* [[Negative cost collar]]		* [[Negative cost collar]]
	* [[Positive cost collar]]		* [[Positive cost collar]]
	* [[Zero cost]]		* [[Zero cost]]

imported>Doug Williamson: Spacing

2013-08-03T06:17:37Z

Spacing

← Older revision		Revision as of 06:17, 3 August 2013
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	''Risk management''.		''Risk management''.

	A form of hedge using options.		A form of hedge using options.

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	* [[Positive cost collar]]		* [[Positive cost collar]]
	* [[Zero cost]]		* [[Zero cost]]

imported>Administrator: CSV import

2012-10-23T14:17:28Z

CSV import

New page

''Risk management''.
A form of hedge using options.

Collar hedges are more complex structures, compared with a simpler cap option or floor option.

An advantage of collars is that they can reduce the net premium paid for the hedge. They do this by adding a short option position to the simple cap or floor. In other words by the corporate hedger ''selling'' an option (in addition to ''buying'' the simple cap or floor option).

The premium received by the corporate reduces their net premium payable. The net premium payable is often zero. (This arrangement is called a ''zero cost'' collar.)

It is also possible - though less common - to construct a ''negative cost'' collar, the net premium being ''receivable'' by the corporate.

The case where the corporate hedger ''pays'' a net premium for the collar is known as a ''positive cost'' collar.

In all cases, the net result and intention is to ‘collar’ the all-in hedged rate achieved within a range which is acceptable to the hedging corporate.

Collars are also known as ''cylinders'', ''corridors'' or ''range forwards''.

== See also ==
* [[Cap]]
* [[Floor]]
* [[Negative cost collar]]
* [[Positive cost collar]]
* [[Zero cost]]