In the case, the hedge fund used an option strategy known as a collar (also known as a bull spread or split-strike conversion). In simple terms, the strategy could be best described as follows: a. Essentially holding the S&P 500 (or equivalents) and buying in the money call options (on the S&P 500) funded by the sale of in the money put options (on the S&P 500) b. Essentially holding the S&P 500 (or equivalents) and buying out of the money call options (on the S&P 500) funded by the sale of out of the money put options (on the S&P 500) c. Essentially holding the S&P 500 (or equivalents) and buying in the money call options (on the S&P 500) d. Essentially holding the S&P 500 (or equivalents) and buying in the money call options (on the S&P 500) as well as buying in the money put options (on the S&P 500)