Compare Strategies
THE COLLAR | MARRIED PUT | |
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About Strategy |
The Collar Option StrategyCollar 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 |
Married Put Option StrategyThis strategy is applied when trader goes long on the underlying asset i.e. he buys the stock in cash market. He has a bullish view and expects the market to rise in the near future, but simultaneously has the fear of downward movement of the markets. In order to cover his position from vulnerabilities he buys one ATM Put Option of the same underlying asset. Here, a trader wi .. |
THE COLLAR Vs MARRIED PUT - Details
THE COLLAR | MARRIED PUT | |
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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 MARRIED PUT - When & How to use ?
THE COLLAR | MARRIED PUT | |
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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 work when the investor goes long in any stock. He expects the rise in market in future. |
Action | Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option | Buy 250 XYZ Shares, Buy 1 ATM Put Option |
Breakeven Point | Price of Features - Call Premium + Put Premium | Purchase Price of Underlying + Premium Paid |
THE COLLAR Vs MARRIED PUT - Risk & Reward
THE COLLAR | MARRIED PUT | |
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Maximum Profit Scenario | Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received | Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid |
Maximum Loss Scenario | Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received | Max Loss = Premium Paid + Commissions Paid |
Risk | Limited | Limited |
Reward | Limited | Unlimited |
THE COLLAR Vs MARRIED PUT - Strategy Pros & Cons
THE COLLAR | MARRIED PUT | |
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Similar Strategies | Call Spread, Bull Put Spread | Long Call |
Disadvantage | • Limited profit. • A trader can book more profit without this strategy if the prices goes high. | Cost of the put options eats into profit margin. |
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 Profit and Limited Risk |