Collar is the combination of short OTM call option and long OTM put option. Here maximum Loss is the stock +/- the premium for the options. The loss on the stock will be the purchase price of the stock minus the strike price of the put option plus the net premium paid or received. Whereas maximum Gain will be the profit of the stock +/- the premium for the optoins. The profit on the stock will be the strike price of the call option minus the purchase price of the stock plus the net premium paid or received.

A collar behaves just like a long call spread. It is suited to investors who already own the stock and are looking to increase their return by writing call options and minimize their downside risk by buying put options.