COVERED COMBINATION	THE COLLAR
About Strategy	Covered Combination Option Strategy This strategy involves selling OTM Call & Put Options and buying the underlying asset in either cash or futures market. It is also known as Covered Strangle as the profits are capped and risk is potentially unlimited. Risk: Un 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..

COVERED COMBINATION Vs THE COLLAR - Details

	COVERED COMBINATION	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	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Price of Features - Call Premium + Put Premium

COVERED COMBINATION Vs THE COLLAR - When & How to use ?

	COVERED COMBINATION	THE COLLAR
Market View	Bullish	Bullish
When to use?	This strategy is mainly suited for investors who are moderately bullish on a stock and are comfortable with increasing their position in the event of a price decline.	It should be used only in case where trader is certain about the bearish market view.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Price of Features - Call Premium + Put Premium

COVERED COMBINATION Vs THE COLLAR - Risk & Reward

	COVERED COMBINATION	THE COLLAR
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED COMBINATION Vs THE COLLAR - Strategy Pros & Cons

	COVERED COMBINATION	THE COLLAR
Similar Strategies	Stock Repair Strategy	Call Spread, Bull Put Spread
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• 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.