Analyzing a Protective Collar Strategy for Volatile Markets

As an investment analyst at a global asset management company, you are evaluating the use of options to enhance returns in a volatile market environment. Imagine that the company holds a significant position in a technology stock, which has recently experienced increased volatility due to potential regulatory changes.

The chief investment officer has asked you to consider an option strategy that can provide protection against downside risk while also allowing for participation in the stock's potential upside. Additionally, the strategy should be cost-efficient and not require excessive margin.

Your task is to recommend an appropriate options strategy and justify your choice. Provide a detailed explanation of the strategy, how it works, its potential benefits, and any risks involved.