How Can a DAO Use a “Collar” Strategy to Further Mitigate Risk on Its Native Token Holdings?

A collar is a three-part options strategy that combines a long position in the underlying asset (the native token) with a purchased put option and a sold call option. The put option provides downside protection below a certain price, while the sold call option generates income to fund the put's purchase and caps the upside profit.

This strategy allows the DAO to define a specific range of potential gains and losses, significantly reducing tail risk at the cost of sacrificing large potential gains.