From Schaeffer's Research:
With the blue chips staggering lower again in today's trading, one speculator took the opportunity to implement a protective options spread on General Electric Company (GE). Earlier today, the trader constructed a collar by simultaneously buying out-of-the-money puts, and selling out-of-the-money calls.
Specifically, the speculator bought to open 17,500 June 14 puts, and sold to open 17,500 June 18 calls. This trade, known as a "collar," is typically implemented by shareholders who are unsure of the near-term prospects for a stock investment. So, in order to hedge against potentially heavy portfolio losses, the trader simultaneously plays a protective put and a covered call on the same security....MORE