THE COLLAR	COVERED CALL
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 Call Option Strategy Mr. X owns Reliance Shares and expects the price to rise in the near future. Mr. X is entitled to receive dividends for the shares he hold in cash market. Covered Call Strategy involves selling of OTM Call Option of the same underlying asset. The OTM Call Option Strike Price will generally be the price, where Mr. X will look to get out o .. Read more..

THE COLLAR Vs COVERED CALL - Details

	THE COLLAR	COVERED CALL
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	CE (Call 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- Premium Received

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

	THE COLLAR	COVERED CALL
Market View	Bullish	Bullish
When to use?	It should be used only in case where trader is certain about the bearish market view.	An investor has a short term neutral view on the asset and for this reason holds the asset long and has a short position to generate income.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Price of Features - Call Premium + Put Premium	Purchase Price of Underlying- Premium Received

THE COLLAR Vs COVERED CALL - Risk & Reward

	THE COLLAR	COVERED CALL
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Limited	Unlimited
Reward	Limited	Limited

THE COLLAR Vs COVERED CALL - Strategy Pros & Cons

	THE COLLAR	COVERED CALL
Similar Strategies	Call Spread, Bull Put Spread	Bull Call Spread
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
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.	• Profit from option premium, rise in the underlying stock and dividends on the stock. • Allows you to generate income from your holding. • Profit when underlying stock price rise, move sideways or marginal fall.