THE COLLAR	RISK REVERSAL
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..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

THE COLLAR Vs RISK REVERSAL - Details

	THE COLLAR	RISK REVERSAL
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option) + Underlying	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Advance	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Limited	Unlimited
Breakeven Point	Price of Features - Call Premium + Put Premium	Premium received - Put Strike Price

THE COLLAR Vs RISK REVERSAL - When & How to use ?

	THE COLLAR	RISK REVERSAL
Market View	Bullish	Bullish
When to use?	It should be used only in case where trader is certain about the bearish market view.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Price of Features - Call Premium + Put Premium	Premium received - Put Strike Price

THE COLLAR Vs RISK REVERSAL - Risk & Reward

	THE COLLAR	RISK REVERSAL
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received	You have nearly unlimited downside risk as well because you are short the put
Risk	Limited	Unlimited
Reward	Limited	Unlimited

THE COLLAR Vs RISK REVERSAL - Strategy Pros & Cons

	THE COLLAR	RISK REVERSAL
Similar Strategies	Call Spread, Bull Put Spread	-
Disadvantage	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.	Unlimited Risk.
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.	Unlimited profit.