Question: The 'collar strategy involves long 1 stock, short 1 call and long 1 put. The payoff of the collar can be written as: ST -max

The 'collar strategy involves long 1 stock, short 1 call and long 1 put. The payoff of the collar can be written as: ST -max (ST - X1.0) + max (X2 - St. O). If at the option expiration, we observe the condition that X2 X2 and Sy is the stock price at the expiration) X1 X2 ST X1 - X2

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