Anatomy of a UCO costless collar:
First, you must be long UCO.
Sell calls near the money or in the money. I prefer at a level that you are still making money on the shares you own.
Buy puts. typically at the same strike as the covered calls, but doesn't need to be. They should be cheaper than the calls sold to make the single transaction 'costless'. I prefer this to be a credit or cash positive. Best to do the above in a single transaction, but not necessary.
This strategy makes money if the underlying goes DOWN. And typically is to protect profits, but also eliminates downside risk even if you are already down. The calls you sold CAP YOUR PROFITS.
Most often, I try to buy back the call side as soon as it can pay for the put purchase. For example:
Sell calls to open at $0.59
Buy puts to open at $0.19
When the price of the calls hit $.24, I bought them back and cleared about $0.34 and netted about $0.14 cash after the cost of the puts. In this case it also paid for some previous puts at $0.10. So I'm somewhat double covered on these shares...all for free.
Hope this helps somebody.