- This topic has 2 replies, 3 voices, and was last updated 1 year ago by
John Moffat.
John Moffat.Viewing 3 posts - 1 through 3 (of 3 total)
-
Posts
-
aamir2111
- Topics: 123
- Replies: 85
- ☆☆☆
Dear tutor,
In case of borrower, how do we select which strike prices to buy put and sell call for collar?
shannonmcnamara
- Topics: 13
- Replies: 14
- ☆
Can you also help to clarify setting up a collar if I’m depositing funds? Confused myself
John Moffat
- Topics: 57
- Replies: 49598
- ☆☆☆☆☆
It partly depends on how many exercise prices are available because if there are more than two you are able to suggest more than one collar.
A borrower will buy a put option and sell a call option. The strike price for the call option will have to be higher than that for the put option (in order to fix both a maximum and a minimum effective interest rate).
A depositor will buy a call option and sell a put option.
Have you both watched my free lecture on interest rate options and collars (and read our free lecture notes on collars)?
aamir2111
shannonmcnamara
John MoffatViewing 3 posts - 1 through 3 (of 3 total)
- You must be logged in to reply to this topic.