How to Setup a Technology Collar Trade – April 20, 2026
The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade. Typically, an OTM call represents a ceiling to the trade (maximum gain) and an OTM put represents a floor (maximum loss). In this article, Invesco QQQ Trust (Nasdaq: QQQ), a technology exchange-traded fund (ETF) will be analyzed to explain how the collar strategy can be implemented.
Graphic representation of a collar trade
What is QQQ?
This is an ETF consisting of the top 100 non-financial corporations listed on the Nasdaq exchange. It includes companies like NVDA, AAPL, MSFT and AMZN.
Option chain data for QQQ on 12/8/2025
- QQQ trading at $623.90
- The $626.00 1/9/2026 call strike showed a bid price of $13.27 (ceiling)
- The $618.00 1/9/2026 put strike showed an ask price of $10.75 (floor)
- The goal is to have a net option credit, which is the case using these 2 strikes
Covered call calculations without the protective put using the BCI Trade Management Calculator (TMC)
- Red circle: 33-day trade through expiration
- Brown cells: Initial return: 2.13%, 23.53% annualized
- Purple cell: 0.34% additional upside potential (if QQQ moves up to, or beyond the $626.00 strike)
Covered call calculations with the protective put using net option credit ($13.27 – $10.75 = $2.52
- Red circle: 33-day trade through expiration
- Brown cells: Initial return: 0.40%, 4.47% annualized (without upside potential)
- Purple cell: 0.34% additional upside potential
- The annualized return with upside potential is 8.2%
Discussion
Technology collar trades can be implemented by using QQQ and net option credits. The advantage is that we are eliminating catastrophic losses by including the protective puts. The disadvantage is that we are generating lower initial time-value returns, but with the same upside potential. To generate a higher collar return, a lower OTM call or OTM put strike will accomplish that goal.
Author: Alan Ellman