Collar

A collar is a strategy that involves holding a long position in an underlying asset, such as a cryptocurrency like ETH, and simultaneously purchasing both a put option and a call option on that same underlying asset. The put option provides protection against potential losses if the market price of the underlying asset falls, while the call option provides the potential for additional gains if the market price of the underlying asset rises.

For example, a company that holds a large quantity of ETH and is concerned about the potential for losses if the price of ETH falls could implement a collar strategy by purchasing a put option with a strike price below the current market price of ETH, and a call option with a strike price above the current market price of ETH. This would give the company the right to sell its ETH at the strike price of the put option if the price of ETH falls, and the right to buy additional ETH at the strike price of the call option if the price of ETH rises. This can help the company to protect its revenues and potentially benefit from additional gains if the price of ETH moves in the desired direction.