CALL BACKSPREAD	PROTECTIVE COLLAR
About Strategy	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r 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..

CALL BACKSPREAD Vs PROTECTIVE COLLAR - Details

	CALL BACKSPREAD	PROTECTIVE COLLAR
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Advance	Beginners
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	Purchase Price of Underlying + Net Premium Paid

CALL BACKSPREAD Vs PROTECTIVE COLLAR - When & How to use ?

	CALL BACKSPREAD	PROTECTIVE COLLAR
Market View	Bullish	Neutral
When to use?	This strategy is used when the investor expects the price of the stock to rise in the future.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Sell 1 ITM Call, BUY 2 OTM Call	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	Purchase Price of Underlying + Net Premium Paid

CALL BACKSPREAD Vs PROTECTIVE COLLAR - Risk & Reward

	CALL BACKSPREAD	PROTECTIVE COLLAR
Maximum Profit Scenario	Unlimited profit potential if the stock goes in upward direction.	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Strike Price of long call - Strike Price of short call - Net premium received	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Limited	Limited
Reward	Unlimited	Limited

CALL BACKSPREAD Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	CALL BACKSPREAD	PROTECTIVE COLLAR
Similar Strategies	-	Bull Put Spread, Bull Call Spread
Disadvantage		• Potential profit is lower or limited.
Advantages	• Unlimited profit potential.	The Risk is limited.