CALL BACKSPREAD	COVERED CALL
About Strategy	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r Read more..	Covered Call Option Strategy Mr. X owns Reliance Shares and expects the price to rise in the near future. Mr. X is entitled to receive dividends for the shares he hold in cash market. Covered Call Strategy involves selling of OTM Call Option of the same underlying asset. The OTM Call Option Strike Price will generally be the price, where Mr. X will look to get out o .. Read more..

CALL BACKSPREAD Vs COVERED CALL - Details

	CALL BACKSPREAD	COVERED CALL
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option)
Number Of Positions	3	2
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	Purchase Price of Underlying- Premium Received

CALL BACKSPREAD Vs COVERED CALL - When & How to use ?

	CALL BACKSPREAD	COVERED CALL
Market View	Bullish	Bullish
When to use?	This strategy is used when the investor expects the price of the stock to rise in the future.	An investor has a short term neutral view on the asset and for this reason holds the asset long and has a short position to generate income.
Action	Sell 1 ITM Call, BUY 2 OTM Call	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	Purchase Price of Underlying- Premium Received

CALL BACKSPREAD Vs COVERED CALL - Risk & Reward

	CALL BACKSPREAD	COVERED CALL
Maximum Profit Scenario	Unlimited profit potential if the stock goes in upward direction.	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Strike Price of long call - Strike Price of short call - Net premium received	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Limited	Unlimited
Reward	Unlimited	Limited

CALL BACKSPREAD Vs COVERED CALL - Strategy Pros & Cons

	CALL BACKSPREAD	COVERED CALL
Similar Strategies	-	Bull Call Spread
Disadvantage		• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	• Unlimited profit potential.	• Profit from option premium, rise in the underlying stock and dividends on the stock. • Allows you to generate income from your holding. • Profit when underlying stock price rise, move sideways or marginal fall.