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 Long Strangle 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 Long Strangle 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 Long Strangle Vs Collar Strategy comparison:
| Comparison Aspect | Collar Strategy | Long Strangle |
| 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 | The long strangle strategy helps the trader to take advantage of the volatility in the market. It is a trend neutral strategy, so the trader does not need to be certain of the direction...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. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Moderately Bullish | Neutral |
| Strategy Level Suitable for | Experts | Intermediates |
| Options Traded | Call, Put and Underlying | Call, Put |
| Number of Positions | 3 | 2 |
| Action Needed | Sell OTM Call, Buy OTM Put, Hold underlying | One OTM Put, One OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Price of Features - Call Premium + Put Premium | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Both call and put options expire worthlessly |
| Investor Expectation | Prices of Assets Go Up | Market Shows High Volatility |
| Strategy Summary | High Potential | Attractive |
| Advantages | Dividend Benefits, Limited Risk | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | Limited Profits | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Collar Strategy Vs Short Put | Long Strangle Vs Short Put |
| Collar Strategy Vs Long Combo | Long Strangle Vs Long Combo | |
| Collar Strategy Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Collar Strategy Vs Long Put | Long Strangle Vs Long Put | |
| Collar Strategy Vs Long Call | Long Strangle Vs Long Call | |
| Collar Strategy Vs Covered Call | Long Strangle Vs Covered Call | |
| Collar Strategy Vs Covered Put | Long Strangle Vs Covered Put | |
| Collar Strategy Vs Protective Call | Long Strangle Vs Protective Call | |
| Collar Strategy Vs Short Box | Long Strangle Vs Short Box | |
| Collar Strategy Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Collar Strategy Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Collar Strategy Vs Box Spread | Long Strangle Vs Box Spread | |
| Collar Strategy Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Collar Strategy Vs Long Strangle | Long Strangle Vs Short Call | |
| Collar Strategy Vs Short Call | Long Strangle Vs Collar Strategy | |
| Collar Strategy Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Collar Strategy Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Collar Strategy Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Collar Strategy Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Collar Strategy Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Collar Strategy Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Collar Strategy Vs Bull Call Spread | Long Strangle Vs Bull Call Spread | |
| Collar Strategy Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Strangle Vs Collar Strategy option strategies.
At the same time, if you are in a neutral market situation and are looking for unlimited profits from your share market trades, then you can opt to go for the Long Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
However, 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.
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.
