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Derivatives

  Derivatives   |   Terms
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  • October 10, 2021
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Participating Collar

A collar which provides investors with a tool to secure a minimum (floor) return combined with reduced participation above a specific maximum (cap) level. With this structure, the holder of a collar accepts to a give up some upside profit potential to pay for downside protection. Unlike a standard collar, which requires the investor to give up the potential of favorable prices on one side of the transaction, with a participating collar it is possible to participate in some of the price decline below the lower bound of the structure.


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