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Buffer ETFs have become popular over the past few years. Covered call writers can draw a reasonable analogy between the collar strategy and these buffer securities. This article will highlight the similarities and draw some conclusions.

What is a Buffer ETF?

Also known as a defined outcome ETF, predominantly on indexes, provides investors with a specified amount of downside protection against losses while also capping potential gains. Options are used to achieve specific risk/reward outcomes.

What is the collar strategy?

This is a covered call writing-like strategy where a protective put is added to a covered call writing trade. The 3 legs of the trade are:

• Long stock position
• Short call position (ceiling)
• Long put position (floor)- This establishes a hard floor, whereas as buffer ETFs offer significant but limited protection to the downside

Here is an image of the collar strategy:

Example of a Buffer ETF: FT Vest Laddered Buffer ETF (BATS: BUFR)

• Largest buffer ETF by assets under management
• 10% buffer against losses (the fund absorbs the 1st 10%, but not beyond)
• Caps the upside at 12.7% – 16.9%, depending on when shares are purchased
• Expense ratio (fees) of 0.99%
• Vanguard’s S&P 500 index fund (VFIAX) has an expense ratio of 0.04%, as a comparison
• BUFR must outperform the market by >0.95% achieve greater results than VFIAX

1-year comparison chart between BUFR and VFIAX

• This chart is typical of most timeframes
• Since our covered call strategies, including the collar, generally outperform the overall market, I would expect the collar to outperform the buffer ETFs in the long run

Discussion

The collar strategy and buffer ETFs both offer a ceiling on profits and a floor to the downside. For buffer ETFs, that floor is limited, for the collar, it is a hard floor, ensuring a maximum defined loss. It is reasonable to expect the collar to outperform buffer ETFs in most timeframes.

Alan Ellman’s Complete Encyclopedia For Covered Call Writing Volume-2

An adjunct to the original Volume 1 with new and enhanced information on low-risk wealth-building strategies for average investors, utilizing stocks and options to create monthly cash flow. Education is power. That’s the premise of the Blue Collar Investor. When the Complete Encyclopedia for Covered Call Writing was published at the end of 2011 and immediately became the best-selling book on this great strategy, I realized that eventually there would be a Volume 2. It took me four years to gather the information for the original version, and I projected four years down the road and realized that more information would become available, more examples could be provided to clarify certain issues and BCI members would make me aware of tangential topics of interest.

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Use in conjunction with our Beginners Corner free video series on covered call writing (Free training link above)

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Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:

1. BCI Educational Webinar #9

Thursday January 15, 2026

8 PM ET – 9:30 PM ET

Watch a video overview of the webinar.

Reserve a seat and register now by clicking here.

2. Long Island Stock Investors Meetup Group: Part I

Thursday February 12, 2026

7:30 PM ET – 9:00 PM ET

Topic, description and registration information to follow.

3. Las Vegas Money Show

February 23 – 25, 2026

The Collar Strategy: Covered Call Writing with Protective Puts

Protecting covered call trades from catastrophic share loss 

This is the strategy Bernie Madoff pretended to use. He called it the split strike conversion strategy, but it was simply a collar. The covered call sets a ceiling on the trade and the protective put guarantees a floor on the trade

Topics discussed

• What is the collar strategy?
• Uses for the collar
• Entering a collar trade
• Option basics for calls
• Option basics for puts
• Real-life example with NVDA
• What is an option-chain?
• Real-life example using the BCI Trade Management Calculator (TMC)
• Strategy pros & cons
• Educational products & discount coupon
• Q&A

Time, date & registration link to follow.

4. Long Island Stock Investors Meetup Group: Part II

Thursday March12, 2026

7:30 PM ET – 9:00 PM ET

Topic, description and registration information to follow.

5. Hollywood Florida Money Show

The Put-Call-Put (PCP) or Wheel Strategy

Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow

Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy a stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.

The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.

More details to follow.