bbqdays

Here's a good explanation for Oil and Gas companies explaining the Costless Collars and Hedges.

A Costless Collar are options designed to have a zero effect if prices drop. Involves using (or writing) calls and puts (usually out of the money). Although called "costless", there is a nominal cost to the options themselves. Here's a link to a pdf file that explains it well. If the link doesn't work by clicking on it, try copy and paste to your address bar.

http://www.aremet.com/images/Costless_Collar.pdf

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