PROTECTIVE COLLAR	SHORT STRANGLE
About Strategy	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 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 Vs SHORT STRANGLE - Details

	PROTECTIVE COLLAR	SHORT STRANGLE
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	Beginners	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium

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

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

PROTECTIVE COLLAR Vs SHORT STRANGLE - Risk & Reward

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

PROTECTIVE COLLAR Vs SHORT STRANGLE - Strategy Pros & Cons

	PROTECTIVE COLLAR	SHORT STRANGLE
Similar Strategies	Bull Put Spread, Bull Call Spread	Short Straddle, Long Strangle
Disadvantage	• Potential profit is lower or limited.	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.
Advantages	The Risk is limited.	• 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.