value of a collar

[hw0799]

in Jam's "practice essay problem #2", the value of the collar option = value of caplet + value of floorlet., by using black's model, treat them as options in a forward risk neutural world. :popcorn:

collar equal to buy a floor and sell a cap.

so why not the value of a collar = value of caplet-value of floorlet? thanks.

[hershey220]

Carmody mentioned that it was a typo, but I thought that the collar = buying a floor and selling a cap.

[bagheera]

Carmody mentioned that it was a typo, but I thought that the collar = buying a floor and selling a cap.

Collar is buying a cap and selling a floor.