THE COLLAR	PROTECTIVE PUT
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..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

THE COLLAR Vs PROTECTIVE PUT - Details

	THE COLLAR	PROTECTIVE PUT
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	PE (Put Option)
Number Of Positions	3	1
Strategy Level	Advance	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Price of Features - Call Premium + Put Premium	Purchase Price of Underlying + Premium Paid

THE COLLAR Vs PROTECTIVE PUT - When & How to use ?

	THE COLLAR	PROTECTIVE PUT
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 adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	Buy 1 ATM Put
Breakeven Point	Price of Features - Call Premium + Put Premium	Purchase Price of Underlying + Premium Paid

THE COLLAR Vs PROTECTIVE PUT - Risk & Reward

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

THE COLLAR Vs PROTECTIVE PUT - Strategy Pros & Cons

	THE COLLAR	PROTECTIVE PUT
Similar Strategies	Call Spread, Bull Put Spread	Long Call, Call Backspread
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
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.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.