COVERED PUT	PROTECTIVE COLLAR
About Strategy	Covered Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the 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..

COVERED PUT Vs PROTECTIVE COLLAR - Details

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

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

	COVERED PUT	PROTECTIVE COLLAR
Market View	Bearish	Neutral
When to use?	The Covered Put works well when the market is moderately Bearish.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Sell Underlying Sell OTM Put Option	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Futures Price + Premium Received	Purchase Price of Underlying + Net Premium Paid

COVERED PUT Vs PROTECTIVE COLLAR - Risk & Reward

	COVERED PUT	PROTECTIVE COLLAR
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED PUT Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	COVERED PUT	PROTECTIVE COLLAR
Similar Strategies	Bear Put Spread, Bear Call Spread	Bull Put Spread, Bull Call Spread
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Potential profit is lower or limited.
Advantages	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.	The Risk is limited.