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 Call Butterfly 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 Call Butterfly 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 Call Butterfly Vs Collar Strategy comparison:
| Comparison Aspect | Short Call Butterfly | Collar Strategy |
| View |  |  |
| Strategy Introduction | Short Call Butterfly is the options strategy which is used when the trader expects a lot of volatility in the market. It is the opposite of the long call butterfly, in which the investor expects...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 | It is necessary that the strike prices of the in-the-money and out-of-the-money call options are equidistant from the at-the-money call options, and all the options have the same expiration date. | 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 | Neutral | Moderately Bullish |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call, Put and Underlying |
| Number of Positions | 4 | 3 |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | Sell OTM Call, Buy OTM Put, Hold underlying |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium | Price of Features - Call Premium + Put Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | High Market Volatility | Prices of Assets Go Up |
| Strategy Summary | Profit in Unsure Market Situations | High Potential |
| Advantages | Limited Exposure, Low Investment | Dividend Benefits, Limited Risk |
| Disadvantages | Low Returns, Requires Significant Market Movement | Limited Profits |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Call Butterfly Vs Short Put | Collar Strategy Vs Short Put |
| Short Call Butterfly Vs Long Combo | Collar Strategy Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Collar Strategy Vs Synthetic Call | |
| Short Call Butterfly Vs Long Put | Collar Strategy Vs Long Put | |
| Short Call Butterfly Vs Long Call | Collar Strategy Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Collar Strategy Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Collar Strategy Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Collar Strategy Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Collar Strategy Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Collar Strategy Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Collar Strategy Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Collar Strategy Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Collar Strategy Vs Short Strangle | |
| Short Call Butterfly Vs Long Strangle | Collar Strategy Vs Long Strangle | |
| Short Call Butterfly Vs Collar Strategy | Collar Strategy Vs Short Call | |
| Short Call Butterfly Vs Long Straddle | Collar Strategy Vs Long Straddle | |
| Short Call Butterfly Vs Short Straddle | Collar Strategy Vs Short Straddle | |
| Short Call Butterfly Vs Long Call Butterfly | Collar Strategy Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Collar Strategy Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Collar Strategy Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Collar Strategy Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Collar Strategy Vs Bull Call Spread | |
| Short Call Butterfly Vs Bull Put Spread | Collar Strategy Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Short Call Butterfly Vs Collar Strategy option strategies.
Furthermore, if you as a trader are expecting price movement (without any idea of the direction) within a neutral market momentum – then short call butterfly is an optimal strategy for you.
There is a limited amount of risk involved and you can expect limited profit only in this options strategy.
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.
The strategy comes with a limited profit potential.
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