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What Is the Net Premium Received or Paid When Establishing a Zero-Cost Collar?

The net premium is zero because the premium received from selling the Call exactly equals the premium paid for buying the Put.
Greeks.Live17.11.25

What Is the Net Premium Received or Paid When Establishing a Zero-Cost Collar?

A zero-cost collar is established when the premium received from selling the Call Option exactly offsets the premium paid for buying the Put Option. This results in a net premium of zero, meaning the investor has created a risk-limiting hedge without any upfront cost.

The strike prices of the Call and Put are carefully selected to achieve this net-zero premium, trading off potential upside for free downside protection.

What Happens to the Moneyness of a Call and a Put Option If the Underlying Asset’s Price Equals the Strike Price Exactly at Expiration?
What Is a “Zero-Cost” Collar and How Is It Achieved?
Is a Net-Credit Collar Generally Preferred over a Zero-Cost Collar?
What Is the Primary Difference in Risk between Short Selling a Stock and Buying a Put Option?

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