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 Short Box 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 Short Box 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 Short Box Vs Collar Strategy comparison:
| Comparison Aspect | Collar Strategy | Short Box |
| 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 | Short Box involves selling a bull call spread along with a bear put spread, both at the same strike prices and expiration date, so that both the spreads balance each other out and create an arbitrage...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. | Recognize Put Call Parity distrubance as soon as possible and take positions to capture the movement. |
| Market Position | Moderately Bullish | Neutral |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | Call, Put and Underlying | 1 Short ITM Call, 1 Long OTM Call, 1 Short ITM Put, 1 Long OTM Put |
| Number of Positions | 3 | 4 |
| Action Needed | Sell OTM Call, Buy OTM Put, Hold underlying | Sell bull call spread along with a Bear put spread |
| Risk for You | Limited | None |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Price of Features - Call Premium + Put Premium | Not Required, Almost No Risk/Loss |
| Investor Intention | Let Options Expire Worthlessly | Take Positions at the right time and capture the profit. |
| Investor Expectation | Prices of Assets Go Up | Profits generated from the strategy will be enough to compensate for the commissions and brokerages paid |
| Strategy Summary | High Potential | Complicated |
| Advantages | Dividend Benefits, Limited Risk | No Capital Needed, Zero Risk |
| Disadvantages | Limited Profits | Low Profit |
| Market Scenarios - Profit | 1 | 3 |
| Market Scenarios - Loss | 1 | 0 |
| Also called as | NA | NA |
| More Comparisons | Collar Strategy Vs Short Put | Short Box Vs Short Put |
| Collar Strategy Vs Long Combo | Short Box Vs Long Combo | |
| Collar Strategy Vs Synthetic Call | Short Box Vs Synthetic Call | |
| Collar Strategy Vs Long Put | Short Box Vs Long Put | |
| Collar Strategy Vs Long Call | Short Box Vs Long Call | |
| Collar Strategy Vs Covered Call | Short Box Vs Covered Call | |
| Collar Strategy Vs Covered Put | Short Box Vs Covered Put | |
| Collar Strategy Vs Protective Call | Short Box Vs Protective Call | |
| Collar Strategy Vs Short Box | Short Box Vs Short Call | |
| Collar Strategy Vs Long Call Condor | Short Box Vs Long Call Condor | |
| Collar Strategy Vs Short Call Condor | Short Box Vs Short Call Condor | |
| Collar Strategy Vs Box Spread | Short Box Vs Box Spread | |
| Collar Strategy Vs Short Strangle | Short Box Vs Short Strangle | |
| Collar Strategy Vs Long Strangle | Short Box Vs Long Strangle | |
| Collar Strategy Vs Short Call | Short Box Vs Collar Strategy | |
| Collar Strategy Vs Long Straddle | Short Box Vs Long Straddle | |
| Collar Strategy Vs Short Straddle | Short Box Vs Short Straddle | |
| Collar Strategy Vs Long Call Butterfly | Short Box Vs Long Call Butterfly | |
| Collar Strategy Vs Short Call Butterfly | Short Box Vs Short Call Butterfly | |
| Collar Strategy Vs Bear Call Spread | Short Box Vs Bear Call Spread | |
| Collar Strategy Vs Bear Put Spread | Short Box Vs Bear Put Spread | |
| Collar Strategy Vs Bull Call Spread | Short Box Vs Bull Call Spread | |
| Collar Strategy Vs Bull Put Spread | Short Box Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Short Box Vs Collar Strategy option strategies.
Remember, the Short box strategy has no risk but provides a consistent (and limited) profits to your trades. To add to that, it is a relatively complex strategy too.
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.
At the same time, be aware of all the related aspects (like the ones listed above) and then make a choice for yourself.
Furthermore, as said 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.
