PROTECTIVE COLLAR	THE COLLAR
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..	The Collar Option Strategy Collar Strategy is an extension to Covered Call Strategy. A trader, who is bullish in nature but has a very low risk appetite and wants to mitigate his risk will implement the Collar Strategy. Collar involves buying of stock in either Cash/Futures Market, buying an ATM Put Option & selling an OTM Call Option. The expiry dates of the op .. Read more..

PROTECTIVE COLLAR Vs THE COLLAR - Details

	PROTECTIVE COLLAR	THE COLLAR
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option) + Underlying
Number Of Positions	2	3
Strategy Level	Beginners	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Price of Features - Call Premium + Put Premium

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

	PROTECTIVE COLLAR	THE COLLAR
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.	It should be used only in case where trader is certain about the bearish market view.
Action	• Short 1 Call Option, • Long 1 Put Option	Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option
Breakeven Point	Purchase Price of Underlying + Net Premium Paid	Price of Features - Call Premium + Put Premium

PROTECTIVE COLLAR Vs THE COLLAR - Risk & Reward

	PROTECTIVE COLLAR	THE COLLAR
Maximum Profit Scenario	• Call strike - stock purchase price - net premium paid + net credit received	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received
Maximum Loss Scenario	• Stock purchase price - put strike - net premium paid - put strike + net credit received	Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received
Risk	Limited	Limited
Reward	Limited	Limited

PROTECTIVE COLLAR Vs THE COLLAR - Strategy Pros & Cons

	PROTECTIVE COLLAR	THE COLLAR
Similar Strategies	Bull Put Spread, Bull Call Spread	Call Spread, Bull Put Spread
Disadvantage	• Potential profit is lower or limited.	• Limited profit. • A trader can book more profit without this strategy if the prices goes high.
Advantages	The Risk is limited.	• This strategy protects the losses on underlying asset. • Risk gets limited if the price of the stocks goes down. • Trader can get ownership benefits life dividend and voting rights.