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What Is a Split-Strike Strategy?
The split-strike, or collar, is how investors put guardrails on a stock position — capping the downside and the upside at once.
NoVo Options Trading · 2026
A split-strike strategy, often called a collar, combines a protective put and a covered call at different strikes to bracket a stock position’s risk and reward. It’s a hedging structure for stock holders.
How it works
You own the stock, buy a protective put below (downside insurance), and sell a call above (to finance the put with premium). The put caps your loss; the call caps your gain. Net, you’ve “collared” the position into a defined range — protected from a crash, but giving up upside beyond the call strike. The premium from the call often offsets the put’s cost.
Why investors use it
Collars protect gains cheaply — an investor sitting on a big stock gain can lock in a floor (the put) while funding it by capping the ceiling (the call). It’s a conservative, defensive structure for holding stock through uncertainty, common among long-term investors and around events. Not a trading strategy — a protective one.
A collar puts guardrails on a stock: the put is your floor, the call is your ceiling, and the call’s premium helps pay for the floor. Protection for a price.
The takeaway
A split-strike/collar brackets a stock position with a protective put and a covered call — defensive, income-offset protection for stock holders. It’s a long-term-investor hedge, not 0DTE scalping. NoVo trades directional options; collars are a different, protective use of options.
More on this: The Collar Strategy, Explained
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.