PROTECTIVE COLLAR	COVERED CALL
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 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..

PROTECTIVE COLLAR Vs COVERED CALL - Details

	PROTECTIVE COLLAR	COVERED CALL
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call 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- Premium Received

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

	PROTECTIVE COLLAR	COVERED CALL
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.	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.
Action	• Short 1 Call Option, • Long 1 Put Option	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Purchase Price of Underlying- Premium Received

PROTECTIVE COLLAR Vs COVERED CALL - Risk & Reward

	PROTECTIVE COLLAR	COVERED CALL
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Limited	Unlimited
Reward	Limited	Limited

PROTECTIVE COLLAR Vs COVERED CALL - Strategy Pros & Cons

	PROTECTIVE COLLAR	COVERED CALL
Similar Strategies	Bull Put Spread, Bull Call Spread	Bull Call Spread
Disadvantage	• Potential profit is lower or limited.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	The Risk is limited.	• 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.