RISK REVERSAL	THE COLLAR
About Strategy	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod Read more..	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..

RISK REVERSAL Vs THE COLLAR - Details

	RISK REVERSAL	THE COLLAR
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option) + Underlying
Number Of Positions	2	3
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Premium received - Put Strike Price	Price of Features - Call Premium + Put Premium

RISK REVERSAL Vs THE COLLAR - When & How to use ?

	RISK REVERSAL	THE COLLAR
Market View	Bullish	Bullish
When to use?	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.	It should be used only in case where trader is certain about the bearish market view.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option
Breakeven Point	Premium received - Put Strike Price	Price of Features - Call Premium + Put Premium

RISK REVERSAL Vs THE COLLAR - Risk & Reward

	RISK REVERSAL	THE COLLAR
Maximum Profit Scenario	You have unlimited profit potential to the upside.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received
Risk	Unlimited	Limited
Reward	Unlimited	Limited

RISK REVERSAL Vs THE COLLAR - Strategy Pros & Cons

	RISK REVERSAL	THE COLLAR
Similar Strategies	-	Call Spread, Bull Put Spread
Disadvantage	Unlimited Risk.	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.
Advantages	Unlimited profit.	• 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.