If you own or have just bought stock, you can create a standard collar by buying a put and selling a call to offset the puts cost. A collar is a conservative low-risk, low-return strategy, because the long put caps risk below its strike price, and the short call reduces any potential upside gains above its strike price.

If both options expire in the same month, a collar can minimize risk, allowing you to hold volatile stocks. However, a standard collar also restricts the trades potential profit to 6-8 percent, which leaves money on the table during bullish trends.

The following example shows how to modify a collar to boost potential profits by selling a call that expires 60- 90 days after the long put. This tactic leaves the underlying position briefly uncovered, but the approach works well if you pick fundamentally strong stocks.