Collar Strategy Executor

WHAT IT DOES

This tool enables DeFi traders and investors to execute a collar strategy (also known as a hedge wrapper) on-chain. A collar is a risk management strategy where the holder of an underlying asset simultaneously buys a protective put option (to limit downside risk) and sells a call option (to offset the cost of the put), creating a defined price range within which the asset's value is effectively hedged. It connects to your wallet and reads the options contract address, underlying asset balance, put strike price, call strike price, put premium, call premium, expiration timestamp, option positions, exercise status, strategy history, and timestamps. The tool signs and submits transactions to execute the collar strategy (buy put + sell call), pay or receive the net premium, manage positions, record strategy metadata, and emit strategy events.

HOW TO USE

1. Connect your wallet using the wallet bridge (supports MetaMask, WalletConnect, and other EVM-compatible wallets).

2. Select the target network that matches your options contract deployment.

3. Enter the options contract address and the underlying asset address (use 0x0 for native token), then click "load contract" to initialize the connection.

4. Click "fetch position" to retrieve your current underlying balance, put/call positions, and exercise status.

5. Configure the collar parameters: put strike price (lower bound), call strike price (upper bound), put premium, call premium, expiration timestamp, and number of collars to execute.

6. Click "fetch current time" to auto-populate a suggested expiration (7 days from now), or manually set a future timestamp.

7. Click "validate strategy" to verify that the call strike is higher than the put strike, expiration is in the future, and your wallet can cover the net premium.

8. Review the displayed position information, underlying balance, and net premium (debit or credit).

9. Click "execute collar" to sign and submit the transaction that simultaneously buys the put options and sells the call options, paying or receiving the net premium.

10. Click "close collar" to close the position before expiration if needed.

TECHNICAL MECHANISM

The tool uses ethers.js v5.7.2 to interact with any EVM-compatible options contract that implements a standard interface (getUnderlyingBalance(address) view, getPutStrike() view, getCallStrike() view, getPutPremium() view, getCallPremium() view, getExpiration() view, getPutPosition(address) view, getCallPosition(address) view, getExerciseStatus(address) view, executeCollar(uint256) external payable, closeCollar(uint256) external, getStrategyHistory(address) view). The executeCollar function atomically buys the put option (paying the put premium) and sells the call option (receiving the call premium) in a single transaction, with the net premium (put premium - call premium) being either paid or received by the user. This simultaneous execution ensures the collar is perfectly hedged without timing risk. The collar creates a price floor (put strike) and a price cap (call strike) around the current asset price, limiting both downside risk and upside potential. Transaction handling follows EIP-1559 gas price calculations using receipt.effectiveGasPrice for accurate cost reporting. Strategy metadata, including timestamps and amounts, is recorded in the contract's strategy history mapping, providing an auditable trail of all collar executions.

WHAT IT CANNOT SEE

This tool operates purely on-chain and cannot verify off-chain volatility — it does not assess market conditions, implied volatility, or whether the collar's strike prices are appropriately positioned for the user's risk tolerance. It cannot predict price movements — the tool cannot forecast whether the asset price will stay within the collar range, break below the put strike, or breach the call strike. It cannot ensure strategy profitability — the collar caps upside potential and may result in lost gains if the asset price rallies above the call strike. The tool cannot detect market manipulation, spoofing, or other forms of market abuse that might affect option pricing. It also cannot guarantee risk management effectiveness — while collars provide protection, they do not eliminate risk entirely and the premium costs may not be fully offset by the call premium received.

PLEASE NOTE

This tool works exclusively with EVM-compatible blockchain networks (Ethereum, Polygon, Arbitrum, Optimism, Base, etc.). It requires the options contract to implement the interface described above. All transactions incur gas fees paid by the connected wallet. The tool maintains no persistent storage — all state is refreshed from the blockchain on each session. The collar strategy involves both buying and selling options, which carries risks including the potential obligation to sell the underlying asset if the call is exercised. Ensure you understand the collar strategy, the concept of capped upside, and the potential for losses before using this tool. Options are sophisticated financial instruments; consider consulting a financial advisor before trading options on-chain.