PROTECTIVE COLLAR	RISK REVERSAL
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..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

PROTECTIVE COLLAR Vs RISK REVERSAL - Details

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

PROTECTIVE COLLAR Vs RISK REVERSAL - When & How to use ?

	PROTECTIVE COLLAR	RISK REVERSAL
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 can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	• Short 1 Call Option, • Long 1 Put Option	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Premium received - Put Strike Price

PROTECTIVE COLLAR Vs RISK REVERSAL - Risk & Reward

	PROTECTIVE COLLAR	RISK REVERSAL
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	You have unlimited profit potential to the upside.
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	You have nearly unlimited downside risk as well because you are short the put
Risk	Limited	Unlimited
Reward	Limited	Unlimited

PROTECTIVE COLLAR Vs RISK REVERSAL - Strategy Pros & Cons

	PROTECTIVE COLLAR	RISK REVERSAL
Similar Strategies	Bull Put Spread, Bull Call Spread	-
Disadvantage	• Potential profit is lower or limited.	Unlimited Risk.
Advantages	The Risk is limited.	Unlimited profit.