Can a Zero-Cost Collar Be Created with Different Expiration Dates for the Options? ⎊ Path

Can a Zero-Cost Collar Be Created with Different Expiration Dates for the Options?

Yes, this is known as a diagonal collar. It involves using options with different expiration dates.

For example, selling a shorter-term call and buying a longer-term put. This is a more complex strategy, often used to take advantage of different time decay rates, but it introduces calendar risk and complicates the zero-cost calculation.

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Glossar

Different Expiration Dates

Horizon ⎊ Different expiration dates in cryptocurrency derivatives, particularly options and perpetual futures, introduce a layer of complexity regarding time value decay and potential assignment risk.

Collar

Framework ⎊ Options collars, within cryptocurrency derivatives and financial engineering, represent a neutral strategy constructed from a protective put and a covered call, designed to limit both potential gains and losses around a specific underlying asset price.