the premium you collected from selling the call is used to finance a downside put protection. the goal is to lock in a minimum payoff, while leave the position someroom to run.
say the stock is currently trading in the market at $50. you can sell some upside call at $55 while buy some downside put at $45. the net cost is about zero. you do need to put some cash down as margin though.
if stocks go all the way to $55, and you are still bullish, you can then roll it to a new collar with a new $50 put and a $60 call.
just my 2c.
