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Payoff of bull spread vs zero cost collar

They are the same right?

generally speaking, not. Do you mean "bull call spread"?

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Collar .... "unlimited" downside and upside
Spread ... limited upside and downside

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I think the difference is in when you would use them.

Bull spread, you think the stock is going to go up, but not that much (not above high call strike). The sold high call subsidizes the purchased low call.

Collar you just want to be protected from a drastic rise or fall of the stock, and want to buy 1 and sell the other to pay for it, giving up the upside.

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maisatomai Wrote:
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> Thanks. The shape is the same right?

Yes it will be the same.

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And for collar, we also own the underlying stock while for bull call spread, we only have the 2 calls (1 long 1 short), isn't it?

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st_laurent Wrote:
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> And for collar, we also own the underlying stock
> while for bull call spread, we only have the 2
> calls (1 long 1 short), isn't it?

Yes for collar we own the underlying stock, we short a call and long a put.

For bull call spread we long 1 call and short another call.

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they are the same. no difference

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The payoffs are the same.

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Spreads cannot be structured as zero-cost (if amounts/notionals/number of contracts of options are equal)

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