Variable Prepaid Forward vs. Collar/Margin Loan
Our current paper is on SSRN
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Educational content. Not investment, tax, or legal advice. Work with a tax adviser.
Last December, I started kicking around the idea of doing a deep comparison of a variable prepaid forward contract (VPF) and a collar combined with a margin loan (C/M).
My co-authors and I published our first version a few months later.
We just published an updated version following a peer-review cycle, and for a little while, our paper is on SSRN.
Quick digression… I’ll be at FPA NorCal (with my son!) this week. Say hello!
Both VPF and C/M are “hedging and monetization” strategies that help investors de-risk concentrated public stock positions.
More specifically, they’re meant to help investors limit downside, while retaining some upside, and giving them capital to put to work elsewhere.
Both solutions look very similar from the outside, but they’re structurally different in meaningful ways.
