COVERED COMBINATION	LONG CALL BUTTERFLY
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 Call Butterfly Option Strategy A trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho .. Read more..

COVERED COMBINATION Vs LONG CALL BUTTERFLY - Details

	COVERED COMBINATION	LONG CALL BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	2	4
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium

COVERED COMBINATION Vs LONG CALL BUTTERFLY - When & How to use ?

	COVERED COMBINATION	LONG CALL BUTTERFLY
Market View	Bullish	Neutral
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.	This strategy should be used when you're expecting no volatility in the price of the underlying.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium

COVERED COMBINATION Vs LONG CALL BUTTERFLY - Risk & Reward

	COVERED COMBINATION	LONG CALL BUTTERFLY
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	Adjacent strikes - Net premium debit.
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	Net Premium Paid
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED COMBINATION Vs LONG CALL BUTTERFLY - Strategy Pros & Cons

	COVERED COMBINATION	LONG CALL BUTTERFLY
Similar Strategies	Stock Repair Strategy	-
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum.