COVERED CALL	PROTECTIVE 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..	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 Vs PROTECTIVE COLLAR - Details

	COVERED CALL	PROTECTIVE COLLAR
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	2
Strategy Level	Advance	Beginners
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Purchase Price of Underlying- Premium Received	Purchase Price of Underlying + Net Premium Paid

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

	COVERED CALL	PROTECTIVE COLLAR
Market View	Bullish	Neutral
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.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	(Buy Underlying) (Sell OTM Call Option)	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Purchase Price of Underlying- Premium Received	Purchase Price of Underlying + Net Premium Paid

COVERED CALL Vs PROTECTIVE COLLAR - Risk & Reward

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

COVERED CALL Vs PROTECTIVE COLLAR - Strategy Pros & Cons

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