THE COLLAR	COVERED COMBINATION
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..	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..

THE COLLAR Vs COVERED COMBINATION - Details

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

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

	THE COLLAR	COVERED COMBINATION
Market View	Bullish	Bullish
When to use?	It should be used only in case where trader is certain about the bearish market view.	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.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Price of Features - Call Premium + Put Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

THE COLLAR Vs COVERED COMBINATION - Risk & Reward

	THE COLLAR	COVERED COMBINATION
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Limited	Limited

THE COLLAR Vs COVERED COMBINATION - Strategy Pros & Cons

	THE COLLAR	COVERED COMBINATION
Similar Strategies	Call Spread, Bull Put Spread	Stock Repair Strategy
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
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 Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.