An options strategy which protects against large losses while also limiting gains. This is done through two strategies known as protective puts and covered calls. The protective collar itself consists of a long position in the underlying security, a put option purchased to hedge the risk, and a call option to fund the put purchase. Essentially a protective collar is a combination of a covered call and a long put position.
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Protective Collar.