PROTECTIVE COLLAR	COVERED PUT
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 Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the .. Read more..

PROTECTIVE COLLAR Vs COVERED PUT - Details

	PROTECTIVE COLLAR	COVERED PUT
Market View	Neutral	Bearish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option) + Underlying
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	Futures Price + Premium Received

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

	PROTECTIVE COLLAR	COVERED PUT
Market View	Neutral	Bearish
When to use?	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.	The Covered Put works well when the market is moderately Bearish.
Action	• Short 1 Call Option, • Long 1 Put Option	Sell Underlying Sell OTM Put Option
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Futures Price + Premium Received

PROTECTIVE COLLAR Vs COVERED PUT - Risk & Reward

	PROTECTIVE COLLAR	COVERED PUT
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	The profit happens when the price of the underlying moves above strike price of Short Put.
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Price of Underlying - Sale Price of Underlying - Premium Received
Risk	Limited	Unlimited
Reward	Limited	Limited

PROTECTIVE COLLAR Vs COVERED PUT - Strategy Pros & Cons

	PROTECTIVE COLLAR	COVERED PUT
Similar Strategies	Bull Put Spread, Bull Call Spread	Bear Put Spread, Bear Call Spread
Disadvantage	• Potential profit is lower or limited.	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.
Advantages	The Risk is limited.	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.