An equity collar hedge with a loan component can offer you a number of benefits in managing the risk inherent in large holdings, especially in cases where the stock position may represent a significant portion of your overall portfolio. This type of hedging strategy combines the protection of an equity collar with the monetizing benefit of a loan.
Protect your concentrated holding from downside risk while you generate the cash you need to diversify.
An equity collar hedge will protect the value of your equity holding, which allows us to offer loans at extremely attractive interest rates. Use your loan proceeds to invest in other securities and diversify your portfolio; or pursue other financial or personal objectives. It's up to you.
Borrow from 50 to 90 per cent of the hedged position's value.
If you're borrowing to invest in securities and diversify your portfolio, legal restrictions cap your loan at 50% of your stock's market value. If you choose to borrow for other purposes, for example to purchase a vacation home or invest in a business, you can borrow up to 90% of the hedged position's value.