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Comparision (LONG GUTS VS PROTECTIVE COLLAR)

 

Compare Strategies

  LONG GUTS PROTECTIVE COLLAR
About Strategy

Long Guts Option Strategy 

This strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. This strategy involves buying 1 ITM Call Option and 1 ITM Put Option. This strategy can be called as Debit Spread because trader’s account is debited at the time of entering the positions.<

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 ..

LONG GUTS Vs PROTECTIVE COLLAR - Details

LONG GUTS PROTECTIVE COLLAR
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Beginners
Reward Profile Unlimited Limited
Risk Profile Limited Limited
Breakeven Point Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid Purchase Price of Underlying + Net Premium Paid

LONG GUTS Vs PROTECTIVE COLLAR - When & How to use ?

LONG GUTS PROTECTIVE COLLAR
Market View Neutral Neutral
When to use? This strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action Buy 1 ITM Call, Buy 1 ITM Put • Short 1 Call Option, • Long 1 Put Option
Breakeven Point Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid Purchase Price of Underlying + Net Premium Paid

LONG GUTS Vs PROTECTIVE COLLAR - Risk & Reward

LONG GUTS PROTECTIVE COLLAR
Maximum Profit Scenario Price of Underlying - Strike Price of Long Call - Net Premium Paid OR Strike Price of Long Put - Price of Underlying - Premium Paid • Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario Net Premium Paid + Strike Price of Long Put - Strike Price of Long Call + Commissions Paid • Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk Limited Limited
Reward Unlimited Limited

LONG GUTS Vs PROTECTIVE COLLAR - Strategy Pros & Cons

LONG GUTS PROTECTIVE COLLAR
Similar Strategies Short Put Ladder, Strip, Strap Bull Put Spread, Bull Call Spread
Disadvantage • More commission involved than simply buying call or put option. • Expensive. • Potential profit is lower or limited.
Advantages • Investors can get unlimited profit if the underlying asset goes up or down. • Ability to profit no matter if the market goes in either direction. • Limited loss. The Risk is limited.

LONG GUTS

PROTECTIVE COLLAR