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 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 Short 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 Short Strangle Vs Collar Strategy comparison:
| Comparison Aspect | Collar Strategy | Short 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 short strangle options trading strategy is an excellent strategy to be deployed when the investor is expecting little to no volatility in the market...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 prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Moderately Bullish | Neutral |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | Call, Put and Underlying | Call |
| Number of Positions | 3 | 4 |
| Action Needed | Sell OTM Call, Buy OTM Put, Hold underlying | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short 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 = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Prices of Assets Go Up | Little or No Market Volatility |
| Strategy Summary | High Potential | Profits in Stable Market |
| Advantages | Dividend Benefits, Limited Risk | Higher Range of Profit |
| Disadvantages | Limited Profits | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Collar Strategy Vs Short Put | Short Strangle Vs Short Put |
| Collar Strategy Vs Long Combo | Short Strangle Vs Long Combo | |
| Collar Strategy Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Collar Strategy Vs Long Put | Short Strangle Vs Long Put | |
| Collar Strategy Vs Long Call | Short Strangle Vs Long Call | |
| Collar Strategy Vs Covered Call | Short Strangle Vs Covered Call | |
| Collar Strategy Vs Covered Put | Short Strangle Vs Covered Put | |
| Collar Strategy Vs Protective Call | Short Strangle Vs Protective Call | |
| Collar Strategy Vs Short Box | Short Strangle Vs Short Box | |
| Collar Strategy Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Collar Strategy Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Collar Strategy Vs Box Spread | Short Strangle Vs Box Spread | |
| Collar Strategy Vs Short Strangle | Short Strangle Vs Short Call | |
| Collar Strategy Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Collar Strategy Vs Short Call | Short Strangle Vs Collar Strategy | |
| Collar Strategy Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Collar Strategy Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Collar Strategy Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Collar Strategy Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Collar Strategy Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Collar Strategy Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Collar Strategy Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Collar Strategy Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Strangle Vs Collar Strategy option strategies.
As mentioned above, 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, if you are in a neutral market situation and have a limited risk appetite, then Short Strangle is a potential option strategy for you. Generally, this strategy is suitable when you are sure that there is going to be low or no market volatility at all.
The strategy comes with a limited profit potential.
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