PROTECTIVE COLLAR	PROTECTIVE 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..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

PROTECTIVE COLLAR Vs PROTECTIVE PUT - Details

	PROTECTIVE COLLAR	PROTECTIVE PUT
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Beginners	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Purchase Price of Underlying + Premium Paid

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

	PROTECTIVE COLLAR	PROTECTIVE PUT
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.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	• Short 1 Call Option, • Long 1 Put Option	Buy 1 ATM Put
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Purchase Price of Underlying + Premium Paid

PROTECTIVE COLLAR Vs PROTECTIVE PUT - Risk & Reward

	PROTECTIVE COLLAR	PROTECTIVE PUT
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Limited	Limited
Reward	Limited	Unlimited

PROTECTIVE COLLAR Vs PROTECTIVE PUT - Strategy Pros & Cons

	PROTECTIVE COLLAR	PROTECTIVE PUT
Similar Strategies	Bull Put Spread, Bull Call Spread	Long Call, Call Backspread
Disadvantage	• Potential profit is lower or limited.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	The Risk is limited.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.