THE COLLAR	PROTECTIVE COLLAR
About Strategy	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..	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..

THE COLLAR Vs PROTECTIVE COLLAR - Details

	THE COLLAR	PROTECTIVE COLLAR
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	CE (Call Option) + PE (Put 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	Purchase Price of Underlying + Net Premium Paid

THE COLLAR Vs PROTECTIVE COLLAR - When & How to use ?

	THE COLLAR	PROTECTIVE COLLAR
Market View	Bullish	Neutral
When to use?	It should be used only in case where trader is certain about the bearish market view.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Price of Features - Call Premium + Put Premium	Purchase Price of Underlying + Net Premium Paid

THE COLLAR Vs PROTECTIVE COLLAR - Risk & Reward

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

THE COLLAR Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	THE COLLAR	PROTECTIVE COLLAR
Similar Strategies	Call Spread, Bull Put Spread	Bull Put Spread, Bull Call Spread
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	• Potential profit is lower or limited.
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.	The Risk is limited.