Collars are one of the cheapest ways to protect your assets. However, the strategy comes with limited upside. In the event of an assignment - which will happen if the short call is in the money at expiration - you'll be obligated to sell 100 shares of the underlying asset at the strike price, effectively capping your profit. Of course, nothing will prohibit you from buying back the underlying asset.The objective of a collar is to establish downside protection for an owned asset by virtue of the long put, wh ...