PROTECTIVE COLLAR	STRAP
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..	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 Vs STRAP - Details

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

PROTECTIVE COLLAR Vs STRAP - When & How to use ?

	PROTECTIVE COLLAR	STRAP
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 used when the investor is bullish on the stock and expects volatility in the near future.
Action	• Short 1 Call Option, • Long 1 Put Option	Buy 2 ATM Call Option, Buy 1 ATM Put Option
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Strike Price of Calls/Puts + (Net Premium Paid/2)

PROTECTIVE COLLAR Vs STRAP - Risk & Reward

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

PROTECTIVE COLLAR Vs STRAP - Strategy Pros & Cons

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