COVERED CALL	THE COLLAR
About Strategy	Covered Call Option Strategy Mr. X owns Reliance Shares and expects the price to rise in the near future. Mr. X is entitled to receive dividends for the shares he hold in cash market. Covered Call Strategy involves selling of OTM Call Option of the same underlying asset. The OTM Call Option Strike Price will generally be the price, where Mr. X will look to get out o 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 CALL Vs THE COLLAR - Details

	COVERED CALL	THE COLLAR
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call 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- Premium Received	Price of Features - Call Premium + Put Premium

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

	COVERED CALL	THE COLLAR
Market View	Bullish	Bullish
When to use?	An investor has a short term neutral view on the asset and for this reason holds the asset long and has a short position to generate income.	It should be used only in case where trader is certain about the bearish market view.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option
Breakeven Point	Purchase Price of Underlying- Premium Received	Price of Features - Call Premium + Put Premium

COVERED CALL Vs THE COLLAR - Risk & Reward

	COVERED CALL	THE COLLAR
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED CALL Vs THE COLLAR - Strategy Pros & Cons

	COVERED CALL	THE COLLAR
Similar Strategies	Bull Call Spread	Call Spread, Bull Put Spread
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.
Advantages	• Profit from option premium, rise in the underlying stock and dividends on the stock. • Allows you to generate income from your holding. • Profit when underlying stock price rise, move sideways or marginal fall.	• 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.