Caps and Collars options are generally offered as a complement to one of our standard natural gas products to further define your market risk profile. They allow you to participate in the natural gas market with measured risk in exchange for a minimal premium.
A cap establishes an upside price limit (ceiling) that will not be exceeded but allows for downside market participation. Your price floats with the market. But, if prices rise, your price remains capped.
A collar has a cap, too, but adds a downside limit (floor) to give you a bandwidth price range.
In each case, these options allow the possibility of enhanced market opportunities, with a moderate measure for controlling risk.