Collar
Own stock + Buy Put + Sell Call
Positions in Chart: Own NIFTY + Buy 25500 PE + Sell 26100 CE. Spot price: 25800
Setup
Long Stock + Buy OTM Put + Sell OTM Call
When to Use
- Protect existing position while generating income
Market Outlook
Volatility Expectation↘Expected to Fall Sharply
Price DirectionExpected to Stay Within Range
Risk & Reward
Breakeven PointStock Price + Net Premium
Max Contract LossStock Price - Put Strike + Net Premium
Max Position LossSame as Max Contract Loss
Strategy Details
Complexity LevelIntermediate
DirectionNeutral to mild bullish
VolatilityFall
Number of Legs3 Leg
Strategy TypeCredit
Hedging CapabilityHeavily Hedged
Description
A collar combines a protective put with a covered call. You own NIFTY at ₹25,800, buy a ₹25,500 Put for ₹45, and sell a ₹26,100 Call for ₹60, receiving ₹15 net credit. This limits both upside and downside
Example
If NIFTY is at ₹25,800, set up: Long Stock + Buy OTM Put + Sell OTM Call.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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