An investor is said to take a position in a “collar” if she buys the asset, buys an out-of-the-money put option on the asset, and sells an out-of-the-money call option on the asset. The two options should have the same time to expiration. Suppose Marie wishes to purchase a collar on Hollywood, Inc., a non-dividend-paying common stock, with six months until expiration. She would like the put to have a strike price of $50 and the call to have a strike price of $60. The current price of the stock is $54 per share. Marie can borrow and lend at the continuously compounded risk-free rate of 4.7 percent per year, and the annual standard deviation of the stock’s return is 45 percent. Use the Black−Scholes model to calculate the total cost of the collar that Marie is interested in buying. What is the effect of the collar?