PROTECTIVE COLLAR	COVERED COMBINATION
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..	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..

PROTECTIVE COLLAR Vs COVERED COMBINATION - Details

	PROTECTIVE COLLAR	COVERED COMBINATION
Market View	Neutral	Bullish
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	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

	PROTECTIVE COLLAR	COVERED COMBINATION
Market View	Neutral	Bullish
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 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.
Action	• Short 1 Call Option, • Long 1 Put Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

PROTECTIVE COLLAR Vs COVERED COMBINATION - Risk & Reward

	PROTECTIVE COLLAR	COVERED COMBINATION
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Limited	Limited

PROTECTIVE COLLAR Vs COVERED COMBINATION - Strategy Pros & Cons

	PROTECTIVE COLLAR	COVERED COMBINATION
Similar Strategies	Bull Put Spread, Bull Call Spread	Stock Repair Strategy
Disadvantage	• Potential profit is lower or limited.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	The Risk is limited.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.