Derivatives · glossary
A cap bought and a floor sold together. The floor pays for the cap, so the cost to enter shrinks, often to nothing, but the buyer can owe again when rates fall. Atlas's policy allowed collars, and it bought none. Chapter 3
Explained in Chapter 3, The Cap, and the Family, of Derivatives.
A collar is a cap bought and a floor sold together. It costs less, because the sold floor pays for part of the cap. But the sold floor is a promise by the buyer, so the buyer can owe again.Read Chapter 1, What a Derivative Is →
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