SHORT CALL	COVERED COMBINATION
About Strategy	Short Call Option Strategy A trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders. However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited. If the strategy Read more..	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..

SHORT CALL Vs COVERED COMBINATION - Details

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

SHORT CALL Vs COVERED COMBINATION - When & How to use ?

	SHORT CALL	COVERED COMBINATION
Market View	Bearish	Bullish
When to use?	It is an aggressive strategy and involves huge risks. It should be used only in case where trader is certain about the bearish market view on the underlying.	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.
Action	Sell or Write Call Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Strike Price of Short Call + Premium Received	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

SHORT CALL Vs COVERED COMBINATION - Risk & Reward

	SHORT CALL	COVERED COMBINATION
Maximum Profit Scenario	Max Profit = Premium Received	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Loss Occurs When Price of Underlying > Strike Price of Short Call + Premium Received	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Unlimited	Unlimited
Reward	Limited	Limited

SHORT CALL Vs COVERED COMBINATION - Strategy Pros & Cons

	SHORT CALL	COVERED COMBINATION
Similar Strategies	Covered Put, Covered Calls	Stock Repair Strategy
Disadvantage	• Unlimited risk to the upside underlying stocks. • Potential loss more than the premium collected.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• With the help of this strategy, traders can book profit from falling prices in the underlying asset. • Less investment, more profit. • Traders can book profit when underlying stock price fall, move sideways or rise by a small amount.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.