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 Straddle 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 Straddle 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 Straddle Vs Collar Strategy comparison:
| Comparison Aspect | Long Straddle | Collar Strategy |
| View |  |  |
| Strategy Introduction | Long Straddle comes into play when the trader expects the market to move sharply, however, the direction of the movement cannot be predicted. The purpose of the strategy to allow the traders to benefit from volatile markets...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 | The trader should be able to trade based on his/her conviction that the markets will move, without being concerned about the direction of the movement. | 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 | Beginners | Experts |
| Options Traded | Call, Put | Call, Put and Underlying |
| Number of Positions | 2 | 3 |
| Action Needed | 1 ATM Call, 1 ATM Put | Sell OTM Call, Buy OTM Put, Hold underlying |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium | Price of Features - Call Premium + Put Premium |
| Investor Intention | Put & Call Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Sharp Market Movement | Prices of Assets Go Up |
| Strategy Summary | Excellent & Simple | High Potential |
| Advantages | Uni-Directional Profit, Unlimited Gains | Dividend Benefits, Limited Risk |
| Disadvantages | High Premium | Limited Profits |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Straddle Vs Short Put | Collar Strategy Vs Short Put |
| Long Straddle Vs Long Combo | Collar Strategy Vs Long Combo | |
| Long Straddle Vs Synthetic Call | Collar Strategy Vs Synthetic Call | |
| Long Straddle Vs Long Put | Collar Strategy Vs Long Put | |
| Long Straddle Vs Long Call | Collar Strategy Vs Long Call | |
| Long Straddle Vs Covered Call | Collar Strategy Vs Covered Call | |
| Long Straddle Vs Covered Put | Collar Strategy Vs Covered Put | |
| Long Straddle Vs Protective Call | Collar Strategy Vs Protective Call | |
| Long Straddle Vs Short Box | Collar Strategy Vs Short Box | |
| Long Straddle Vs Long Call Condor | Collar Strategy Vs Long Call Condor | |
| Long Straddle Vs Short Call Condor | Collar Strategy Vs Short Call Condor | |
| Long Straddle Vs Box Spread | Collar Strategy Vs Box Spread | |
| Long Straddle Vs Short Strangle | Collar Strategy Vs Short Strangle | |
| Long Straddle Vs Long Strangle | Collar Strategy Vs Long Strangle | |
| Long Straddle Vs Collar Strategy | Collar Strategy Vs Short Call | |
| Long Straddle Vs Short Call | Collar Strategy Vs Long Straddle | |
| Long Straddle Vs Short Straddle | Collar Strategy Vs Short Straddle | |
| Long Straddle Vs Long Call Butterfly | Collar Strategy Vs Long Call Butterfly | |
| Long Straddle Vs Short Call Butterfly | Collar Strategy Vs Short Call Butterfly | |
| Long Straddle Vs Bear Call Spread | Collar Strategy Vs Bear Call Spread | |
| Long Straddle Vs Bear Put Spread | Collar Strategy Vs Bear Put Spread | |
| Long Straddle Vs Bull Put Spread | Collar Strategy Vs Bull Call Spread | |
| Long Straddle Vs Bull Put Spread | Collar Strategy Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Collar Strategy option strategies.
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.
However, 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 Straddle strategy.
There is a limited amount of risk involved as well, however, there are good chances of high profits if the strategy is executed well.
Furthermore, as told above, it also depends on the market situation.
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