COVERED PUT	THE COLLAR
About Strategy	Covered Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the Read more..	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..

COVERED PUT Vs THE COLLAR - Details

	COVERED PUT	THE COLLAR
Market View	Bearish	Bullish
Type (CE/PE)	PE (Put Option) + Underlying	CE (Call Option) + PE (Put Option) + Underlying
Number Of Positions	2	3
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Futures Price + Premium Received	Price of Features - Call Premium + Put Premium

COVERED PUT Vs THE COLLAR - When & How to use ?

	COVERED PUT	THE COLLAR
Market View	Bearish	Bullish
When to use?	The Covered Put works well when the market is moderately Bearish.	It should be used only in case where trader is certain about the bearish market view.
Action	Sell Underlying Sell OTM Put Option	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option
Breakeven Point	Futures Price + Premium Received	Price of Features - Call Premium + Put Premium

COVERED PUT Vs THE COLLAR - Risk & Reward

	COVERED PUT	THE COLLAR
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED PUT Vs THE COLLAR - Strategy Pros & Cons

	COVERED PUT	THE COLLAR
Similar Strategies	Bear Put Spread, Bear Call Spread	Call Spread, Bull Put Spread
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.
Advantages	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.	• 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.