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 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 Short 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 Short Put Vs Collar Strategy comparison:
| Comparison Aspect | Short Put | Collar Strategy |
| View |  |  |
| Strategy Introduction | The short put strategy is used when the investor is bullish towards the market and expects the prices to go up. He then sells the put option and makes a profit if...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 | Investor is obligated to sell the shares at the predetermined price, at the time of expiry, if the buyer of the put option chooses to exercise his option. | 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 | Bullish | Moderately Bullish |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Call, Put and Underlying |
| Number of Positions | 1 | 3 |
| Action Needed | Sell Put Option | Sell OTM Call, Buy OTM Put, Hold underlying |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Price of Features - Call Premium + Put Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices go up sharply | Prices of Assets Go Up |
| Strategy Summary | Complex & Risky | High Potential |
| Advantages | Steady source of income till market remains bullish | Dividend Benefits, Limited Risk |
| Disadvantages | High Risk, Limited Profit | Limited Profits |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Collar Strategy Vs Short Put |
| Short Put Vs Long Combo | Collar Strategy Vs Long Combo | |
| Short Put Vs Synthetic Call | Collar Strategy Vs Synthetic Call | |
| Short Put Vs Short Call | Collar Strategy Vs Long Put | |
| Short Put Vs Long Call | Collar Strategy Vs Long Call | |
| Short Put Vs Covered Call | Collar Strategy Vs Covered Call | |
| Short Put Vs Covered Put | Collar Strategy Vs Covered Put | |
| Short Put Vs Protective Call | Collar Strategy Vs Protective Call | |
| Short Put Vs Short Box | Collar Strategy Vs Short Box | |
| Short Put Vs Long Call Condor | Collar Strategy Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Collar Strategy Vs Short Call Condor | |
| Short Put Vs Box Spread | Collar Strategy Vs Box Spread | |
| Short Put Vs Short Strangle | Collar Strategy Vs Short Strangle | |
| Short Put Vs Long Strangle | Collar Strategy Vs Long Strangle | |
| Short Put Vs Collar Strategy | Collar Strategy Vs Short Call | |
| Short Put Vs Long Straddle | Collar Strategy Vs Long Straddle | |
| Short Put Vs Short Straddle | Collar Strategy Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Collar Strategy Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Collar Strategy Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Collar Strategy Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Collar Strategy Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Collar Strategy Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Collar Strategy Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short 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.
However, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited.
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.
