STRAP	PROTECTIVE COLLAR
About Strategy	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin 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..

STRAP Vs PROTECTIVE COLLAR - Details

	STRAP	PROTECTIVE COLLAR
Market View	Neutral	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Beginners	Beginners
Reward Profile	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid	Limited
Risk Profile	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts	Limited
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Purchase Price of Underlying + Net Premium Paid

STRAP Vs PROTECTIVE COLLAR - When & How to use ?

	STRAP	PROTECTIVE COLLAR
Market View	Neutral	Neutral
When to use?	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.	This Strategy is implemented when the investor requires downside protection for the short - to medium term but at lower cost.
Action	Buy 2 ATM Call Option, Buy 1 ATM Put Option	• Short 1 Call Option, • Long 1 Put Option
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Purchase Price of Underlying + Net Premium Paid

STRAP Vs PROTECTIVE COLLAR - Risk & Reward

	STRAP	PROTECTIVE COLLAR
Maximum Profit Scenario	UNLIMITED	• Call strike - stock purchase price - net premium paid + net credit received
Maximum Loss Scenario	Net Premium Paid	• Stock purchase price - put strike - net premium paid - put strike + net credit received
Risk	Limited	Limited
Reward	Unlimited	Limited

STRAP Vs PROTECTIVE COLLAR - Strategy Pros & Cons

	STRAP	PROTECTIVE COLLAR
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	Bull Put Spread, Bull Call Spread
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	• Potential profit is lower or limited.
Advantages	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.	The Risk is limited.