When it comes to Options Trading, there are different complexities involved in terms of choosing a specific strategy that works the best for you.
At the same time, each strategy has its own set of advantages as well as limitations, thus making the concept of options trading even more challenging. Thus, in case you are looking to fit a particular strategy in your option trades, just check few areas before you make a choice.
In this detailed comparison of Collar Strategy Vs Protective Call options trading strategies, we will be looking at the below-mentioned aspects and more:
- Current Market Position
- Your Risk Appetite
- Your Trading Experience
- Profit Potential
- Intention and Expectation of a trader
- Break-even point of your trade
Apart from the Collar Strategy Vs Protective Call strategies, there are more than 25 comparisons of each of these strategies with other option strategies. With all these comparisons, you should be able to filter the ones that work the best for you.
Here is the detailed Collar Strategy Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Collar Strategy |
| View |  |  |
| Strategy Introduction | A Protective call combines an existing short position on an underlying asset with buying of call options, to safeguard against the price rise against the expectations...more | The collar strategy is used when the trader is mildly bullish towards the market. He expects the prices to go up, but at the same time, he wants to limit his risks if the prices go down. It is ideally not used by the...more |
| Investor Obligation | Protective call works as a protection against the price reversal and is like an insurance policy | The trader is able to benefit from the price rise by holding the underlying security and receives ownership benefits like dividends. At the same time, the risks are limited with the use of protective put. |
| Market Position | Bearish | Moderately Bullish |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call, Put and Underlying |
| Number of Positions | 2 | 3 |
| Action Needed | Short Position on Buy Call Option | Sell OTM Call, Buy OTM Put, Hold underlying |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Underlying Price - Call Premium | Price of Features - Call Premium + Put Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Let Options Expire Worthlessly |
| Investor Expectation | Market Prices to Go Down | Prices of Assets Go Up |
| Strategy Summary | Experience Helps | High Potential |
| Advantages | Unlimited Profit, limited Risk | Dividend Benefits, Limited Risk |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Limited Profits |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Collar Strategy Vs Short Put |
| Protective Call Vs Long Combo | Collar Strategy Vs Long Combo | |
| Protective Call Vs Synthetic Call | Collar Strategy Vs Synthetic Call | |
| Protective Call Vs Long Put | Collar Strategy Vs Long Put | |
| Protective Call Vs Long Call | Collar Strategy Vs Long Call | |
| Protective Call Vs Covered Call | Collar Strategy Vs Covered Call | |
| Protective Call Vs Covered Put | Collar Strategy Vs Covered Put | |
| Protective Call Vs Short Call | Collar Strategy Vs Protective Call | |
| Protective Call Vs Short Box | Collar Strategy Vs Short Box | |
| Protective Call Vs Long Call Condor | Collar Strategy Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Collar Strategy Vs Short Call Condor | |
| Protective Call Vs Box Spread | Collar Strategy Vs Box Spread | |
| Protective Call Vs Short Strangle | Collar Strategy Vs Short Strangle | |
| Protective Call Vs Long Strangle | Collar Strategy Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Collar Strategy Vs Short Call | |
| Protective Call Vs Long Straddle | Collar Strategy Vs Long Straddle | |
| Protective Call Vs Short Straddle | Collar Strategy Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Collar Strategy Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Collar Strategy Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Collar Strategy Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Collar Strategy Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Collar Strategy Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Collar Strategy Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Collar Strategy Vs Protective Call option strategies.
Furthermore, if you are looking at a bearish market momentum and want to take a limited risk with an eye on unlimited profits, then the protective call is the strategy you must be using.
At the same time, if you are in a moderately Bullish Market situation and are looking for consistent but limited profits for your share market trades, then you can opt to go for the Collar Strategy. There is a limited scope of risk involved in this strategy too.
This needs to be known that the profit you get using these strategies is also limited in scope.
Furthermore, as told above, it also depends on the market situation.
In case you are looking to trade in options segment or share market in general, let us assist you in that. Just fill the form below and we will take you to the steps ahead.
