A hedging strategy used for concentrated high-value stock positions. For legal reasons, the more usual term for it is "zero premium collar." In this strategy, you purchase put options and sell call options on your stock through a securities firm experienced with these transactions. This sets a trading range (i.e. the "collar"). It is "costless" to an individual in that no net out-of-pocket expenses result from the totaling of the prices of puts and calls.

This strategy allows you to hold the stock after an option exercise for long-term capital gains and minimizes the risks of stock-price fluctuations. The hedged position can be monetized with a loan (if you are not a senior executive, director, or other affiliate). But the strategy has uncertain legal and tax ramifications, it is prohibited by many companies, and you give up the benefit of future price increases beyond the collar price.