COVERED COMBINATION	LONG PUT
About Strategy	Covered Combination Option Strategy This strategy involves selling OTM Call & Put Options and buying the underlying asset in either cash or futures market. It is also known as Covered Strangle as the profits are capped and risk is potentially unlimited. Risk: Un Read more..	Long Put Option Strategy This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. Risk: The maximum loss will be the premium amount paid.< .. Read more..

COVERED COMBINATION Vs LONG PUT - Details

	COVERED COMBINATION	LONG PUT
Market View	Bullish	Bearish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Advance	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Strike Price of Long Put - Premium Paid

COVERED COMBINATION Vs LONG PUT - When & How to use ?

	COVERED COMBINATION	LONG PUT
Market View	Bullish	Bearish
When to use?	This strategy is mainly suited for investors who are moderately bullish on a stock and are comfortable with increasing their position in the event of a price decline.	A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Buy Put Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Strike Price of Long Put - Premium Paid

COVERED COMBINATION Vs LONG PUT - Risk & Reward

	COVERED COMBINATION	LONG PUT
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	Profit = Strike Price of Long Put - Premium Paid
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	Max Loss = Premium Paid + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED COMBINATION Vs LONG PUT - Strategy Pros & Cons

	COVERED COMBINATION	LONG PUT
Similar Strategies	Stock Repair Strategy	Protective Call, Short Put
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk.