THE COLLAR	IRON BUTTERFLY
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..	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..

THE COLLAR Vs IRON BUTTERFLY - Details

	THE COLLAR	IRON BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	CE (Call Option) + PE (Put Option)
Number Of Positions	3	4
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Price of Features - Call Premium + Put Premium	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

THE COLLAR Vs IRON BUTTERFLY - When & How to use ?

	THE COLLAR	IRON BUTTERFLY
Market View	Bullish	Neutral
When to use?	It should be used only in case where trader is certain about the bearish market view.	This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Price of Features - Call Premium + Put Premium	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

THE COLLAR Vs IRON BUTTERFLY - Risk & Reward

	THE COLLAR	IRON BUTTERFLY
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received	Net Premium Received - Commissions Paid
Maximum Loss Scenario	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk	Limited	Limited
Reward	Limited	Limited

THE COLLAR Vs IRON BUTTERFLY - Strategy Pros & Cons

	THE COLLAR	IRON BUTTERFLY
Similar Strategies	Call Spread, Bull Put Spread	Long Put Butterfly, Neutral Calendar Spread
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	• Large commissions involved. • Probability of losses are higher.
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.	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.