The collar is also known as medium covered call. It is quite similar to a covered call strategy. It is only added one more step so that stop loss is unnecessary to be set in this strategy. This strategy is established by buying a security and near the money put option and following selling an out of the money option. Due to the put option that you have bought, it is unnecessary to set a stop loss because the put option will protect the security if the security price goes down. However, the money option premium that you have collected has to be used to pay for the put option premium.
If the security price goes down, you still lose about half of the total put option premium. This is because the money call option premium is less than the near the money put option premium. This strategy is for half or a one-year long-term investment.