PROTECTIVE PUT	PROTECTIVE COLLAR
About Strategy	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..	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..

PROTECTIVE PUT Vs PROTECTIVE COLLAR - Details

	PROTECTIVE PUT	PROTECTIVE COLLAR
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	1	2
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Purchase Price of Underlying + Net Premium Paid

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

	PROTECTIVE PUT	PROTECTIVE COLLAR
Market View	Bullish	Neutral
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Buy 1 ATM Put	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Purchase Price of Underlying + Premium Paid	Purchase Price of Underlying + Net Premium Paid

PROTECTIVE PUT Vs PROTECTIVE COLLAR - Risk & Reward

	PROTECTIVE PUT	PROTECTIVE COLLAR
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Limited	Limited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	PROTECTIVE PUT	PROTECTIVE COLLAR
Similar Strategies	Long Call, Call Backspread	Bull Put Spread, Bull Call Spread
Disadvantage	• 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.	• Potential profit is lower or limited.
Advantages	• 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.	The Risk is limited.