Please don't get the wrong impression from the title. There is nothing wrong with options trading. In fact, as you know, I strongly believe it's an effective and efficient method for investors to reduce risk when investing in the stock market.
And then there's Bernie Madoff. There are no words to describe his despicable actions, but he does bring to mind a TV show:
Options are versatile investing tools and there are a good variety of strategies available to the option trader. I recommend collars for those who are very new to options and want to preserve the value of their investment portfolios. It's a method worth learning.
In summary, collars involve stock ownership, coupled with the writing (sale) of a covered call option (to generate cash) and the purchase of a put option (using the cash from the call sale). The put acts as an insurance policy, guaranteeing a pre-determined minimum value for the investor's assets. That minimum allows investors to avoid painful losses when markets tumble.