THE COLLAR	LONG PUT BUTTERFLY
About Strategy	The Collar Option Strategy Collar Strategy is an extension to Covered Call Strategy. A trader, who is bullish in nature but has a very low risk appetite and wants to mitigate his risk will implement the Collar Strategy. Collar involves buying of stock in either Cash/Futures Market, buying an ATM Put Option & selling an OTM Call Option. The expiry dates of the op Read more..	Long Put Butterfly Option Strategy  The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. This strategy involves sale of 2 ATM Put Options, buy 1 ITM and 1 OTM Put Option. The risk and reward are limited. Read more..

THE COLLAR Vs LONG PUT BUTTERFLY - Details

	THE COLLAR	LONG PUT BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	PE (Put Option)
Number Of Positions	3	4
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Price of Features - Call Premium + Put Premium	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

THE COLLAR Vs LONG PUT BUTTERFLY - When & How to use ?

	THE COLLAR	LONG PUT BUTTERFLY
Market View	Bullish	Neutral
When to use?	It should be used only in case where trader is certain about the bearish market view.	The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	Buy 1 OTM Put, Sell 2 ATM Puts, Buy 1 ITM Put
Breakeven Point	Price of Features - Call Premium + Put Premium	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

THE COLLAR Vs LONG PUT BUTTERFLY - Risk & Reward

	THE COLLAR	LONG PUT BUTTERFLY
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received	Strike Price of Higher Strike Long Put - Strike Price of Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received	When Price of Underlying <= Strike Price of Lower Strike Long Put OR Price of Underlying >= Strike Price of Higher Strike Long Put
Risk	Limited	Limited
Reward	Limited	Limited

THE COLLAR Vs LONG PUT BUTTERFLY - Strategy Pros & Cons

	THE COLLAR	LONG PUT BUTTERFLY
Similar Strategies	Call Spread, Bull Put Spread	Iron Condors, Iron Butterfly
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	• Risk is higher than reward. • When the underlying price is in between the two breakeven points, time decay hurts the position.
Advantages	• This strategy protects the losses on underlying asset. • Risk gets limited if the price of the stocks goes down. • Trader can get ownership benefits life dividend and voting rights.	• Limited maximum loss. • Unlimited profit potential, risk only limited to loss of premium. • Benefits from low volatility.