SHORT STRANGLE	PROTECTIVE COLLAR
About Strategy	Short Strangle Option Strategy  This strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if 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..

SHORT STRANGLE Vs PROTECTIVE COLLAR - Details

	SHORT STRANGLE	PROTECTIVE COLLAR
Market View	Neutral	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	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	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Purchase Price of Underlying + Net Premium Paid

SHORT STRANGLE Vs PROTECTIVE COLLAR - When & How to use ?

	SHORT STRANGLE	PROTECTIVE COLLAR
Market View	Neutral	Neutral
When to use?	This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Sell OTM Call, Sell OTM Put	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Purchase Price of Underlying + Net Premium Paid

SHORT STRANGLE Vs PROTECTIVE COLLAR - Risk & Reward

	SHORT STRANGLE	PROTECTIVE COLLAR
Maximum Profit Scenario	Maximum Profit = Net Premium Received	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Unlimited	Limited
Reward	Limited	Limited

SHORT STRANGLE Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	SHORT STRANGLE	PROTECTIVE COLLAR
Similar Strategies	Short Straddle, Long Strangle	Bull Put Spread, Bull Call Spread
Disadvantage	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.	• Potential profit is lower or limited.
Advantages	• Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range.	The Risk is limited.