PROTECTIVE COLLAR	IRON BUTTERFLY
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..	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..

PROTECTIVE COLLAR Vs IRON BUTTERFLY - Details

	PROTECTIVE COLLAR	IRON BUTTERFLY
Market View	Neutral	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	4
Strategy Level	Beginners	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

PROTECTIVE COLLAR Vs IRON BUTTERFLY - When & How to use ?

	PROTECTIVE COLLAR	IRON BUTTERFLY
Market View	Neutral	Neutral
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 implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	• Short 1 Call Option, • Long 1 Put Option	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

PROTECTIVE COLLAR Vs IRON BUTTERFLY - Risk & Reward

	PROTECTIVE COLLAR	IRON BUTTERFLY
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	Net Premium Received - Commissions Paid
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk	Limited	Limited
Reward	Limited	Limited

PROTECTIVE COLLAR Vs IRON BUTTERFLY - Strategy Pros & Cons

	PROTECTIVE COLLAR	IRON BUTTERFLY
Similar Strategies	Bull Put Spread, Bull Call Spread	Long Put Butterfly, Neutral Calendar Spread
Disadvantage	• Potential profit is lower or limited.	• Large commissions involved. • Probability of losses are higher.
Advantages	The Risk is limited.	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.