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 Covered Put Vs Collar Strategy 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 Covered Put Vs Collar Strategy 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 Covered Put Vs Collar Strategy comparison:
| Comparison Aspect | Collar Strategy | Covered Put |
| View |  |  |
| Strategy Introduction | 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 | Covered Put is the options trading strategy which involves shorting the underlying asset, along with selling a put option on the same number of shares. By doing this, the trader is able to...more |
| Investor Obligation | 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. | If the price of the stock goes below the strike price of the put option, the put option will be expired and will have to be brought back. |
| Market Position | Moderately Bullish | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | Call, Put and Underlying | Put |
| Number of Positions | 3 | 2 |
| Action Needed | Sell OTM Call, Buy OTM Put, Hold underlying | Short on Underlying and Short Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Price of Features - Call Premium + Put Premium | Futures Price + Premium Received |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Up | Prices of Assets Go Down Slightly |
| Strategy Summary | High Potential | Steady Profits with Caution |
| Advantages | Dividend Benefits, Limited Risk | Income Generation, Reduced Losses |
| Disadvantages | Limited Profits | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Collar Strategy Vs Short Put | Covered Put Vs Short Put |
| Collar Strategy Vs Long Combo | Covered Put Vs Long Combo | |
| Collar Strategy Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Collar Strategy Vs Long Put | Covered Put Vs Long Put | |
| Collar Strategy Vs Long Call | Covered Put Vs Long Call | |
| Collar Strategy Vs Covered Call | Covered Put Vs Covered Call | |
| Collar Strategy Vs Covered Put | Covered Put Vs Short Call | |
| Collar Strategy Vs Protective Call | Covered Put Vs Protective Call | |
| Collar Strategy Vs Short Box | Covered Put Vs Short Box | |
| Collar Strategy Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Collar Strategy Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Collar Strategy Vs Box Spread | Covered Put Vs Box Spread | |
| Collar Strategy Vs Short Strangle | Covered Put Vs Short Strangle | |
| Collar Strategy Vs Long Strangle | Covered Put Vs Long Strangle | |
| Collar Strategy Vs Short Call | Covered Put Vs Collar Strategy | |
| Collar Strategy Vs Long Straddle | Covered Put Vs Long Straddle | |
| Collar Strategy Vs Short Straddle | Covered Put Vs Short Straddle | |
| Collar Strategy Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Collar Strategy Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Collar Strategy Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Collar Strategy Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Collar Strategy Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Collar Strategy Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Covered Put Vs Collar Strategy option strategies.
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 this strategy is also limited in scope.
If you are looking at a bearish market momentum and are open towards high risk with consistent but limited profits, then Covered Put is suitable for your trading style.
Furthermore, as told above, it also depends on the market situation.
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