COVERED COMBINATION	PROTECTIVE COLLAR
About Strategy	Covered Combination Option Strategy This strategy involves selling OTM Call & Put Options and buying the underlying asset in either cash or futures market. It is also known as Covered Strangle as the profits are capped and risk is potentially unlimited. Risk: Un Read more..	Protective Collar Strategy This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost. Buying protective puts can be an expensive proposition and writing OTM calls can defray the cost of the puts quite substantially. Protective Collar is considered as bearish to neutral strategy. In this strategy risk and reward is both are limited. This .. Read more..

COVERED COMBINATION Vs PROTECTIVE COLLAR - Details

	COVERED COMBINATION	PROTECTIVE COLLAR
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	2
Strategy Level	Advance	Beginners
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Purchase Price of Underlying + Net Premium Paid

COVERED COMBINATION Vs PROTECTIVE COLLAR - When & How to use ?

	COVERED COMBINATION	PROTECTIVE COLLAR
Market View	Bullish	Neutral
When to use?	This strategy is mainly suited for investors who are moderately bullish on a stock and are comfortable with increasing their position in the event of a price decline.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Sell 1 OTM Call, Sell 1 OTM Put	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Purchase Price of Underlying + Net Premium Paid

COVERED COMBINATION Vs PROTECTIVE COLLAR - Risk & Reward

	COVERED COMBINATION	PROTECTIVE COLLAR
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED COMBINATION Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	COVERED COMBINATION	PROTECTIVE COLLAR
Similar Strategies	Stock Repair Strategy	Bull Put Spread, Bull Call Spread
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Potential profit is lower or limited.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	The Risk is limited.