Compare Strategies
| THE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
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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 |
Diagonal Bull Call Spread Option StrategyThis strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option. Risk:
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THE COLLAR Vs DIAGONAL BULL CALL SPREAD - Details
| THE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) + Underlying | CE (Call Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Price of Features - Call Premium + Put Premium |
THE COLLAR Vs DIAGONAL BULL CALL SPREAD - When & How to use ?
| THE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bullish |
| When to use? | It should be used only in case where trader is certain about the bearish market view. | |
| Action | Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call |
| Breakeven Point | Price of Features - Call Premium + Put Premium |
THE COLLAR Vs DIAGONAL BULL CALL SPREAD - Risk & Reward
| THE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received | |
| Maximum Loss Scenario | Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received | |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
THE COLLAR Vs DIAGONAL BULL CALL SPREAD - Strategy Pros & Cons
| THE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Similar Strategies | Call Spread, Bull Put Spread | Bull Put Spread |
| Disadvantage | • Limited profit. • A trader can book more profit without this strategy if the prices goes high. | |
| 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. |