Compare Strategies
| PROTECTIVE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
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| 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 |
Diagonal Bull Call Spread Option StrategyThis strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option. Risk:
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PROTECTIVE COLLAR Vs DIAGONAL BULL CALL SPREAD - Details
| PROTECTIVE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Purchase Price of Underlying + Net Premium Paid |
PROTECTIVE COLLAR Vs DIAGONAL BULL CALL SPREAD - When & How to use ?
| PROTECTIVE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| 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. | |
| Action | • Short 1 Call Option, • Long 1 Put Option | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call |
| Breakeven Point | Purchase Price of Underlying + Net Premium Paid |
PROTECTIVE COLLAR Vs DIAGONAL BULL CALL SPREAD - Risk & Reward
| PROTECTIVE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | • Call strike - stock purchase price - net premium paid + net credit received | |
| Maximum Loss Scenario | • Stock purchase price - put strike - net premium paid - put strike + net credit received | |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
PROTECTIVE COLLAR Vs DIAGONAL BULL CALL SPREAD - Strategy Pros & Cons
| PROTECTIVE COLLAR | DIAGONAL BULL CALL SPREAD | |
|---|---|---|
| Similar Strategies | Bull Put Spread, Bull Call Spread | Bull Put Spread |
| Disadvantage | • Potential profit is lower or limited. | |
| Advantages | The Risk is limited. |