- This topic has 1 reply, 2 voices, and was last updated 5 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Interest rate collar
Dear Tutor,
Just a small question (Which may sound silly), but when we as borrower are setting a collar, the strike price at which we buy a ‘put’ option has to be lower than the strike price at which we sell a ‘call’ option, isnt it?
Secondly, if we buying a Sept ‘Put’ option, do we sell sept ‘call’ options itself? or sell ‘call’ options of any other months as well to reduce the premium cost?
Yes – if we are a borrower then we will buy a put option at a lower strike price than the strike price at which we sell a call option.
We always buy and sell options for the same month.