COVERED COMBINATION	PROTECTIVE 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..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

COVERED COMBINATION Vs PROTECTIVE PUT - Details

	COVERED COMBINATION	PROTECTIVE PUT
Market View	Bullish	Bullish
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	Purchase Price of Underlying + Premium Paid

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

	COVERED COMBINATION	PROTECTIVE PUT
Market View	Bullish	Bullish
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 is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Buy 1 ATM Put
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Purchase Price of Underlying + Premium Paid

COVERED COMBINATION Vs PROTECTIVE PUT - Risk & Reward

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

COVERED COMBINATION Vs PROTECTIVE PUT - Strategy Pros & Cons

	COVERED COMBINATION	PROTECTIVE PUT
Similar Strategies	Stock Repair Strategy	Long Call, Call Backspread
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.