COVERED COMBINATION	SHORT STRADDLE
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..	Short Straddle Option strategy This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an .. Read more..

COVERED COMBINATION Vs SHORT STRADDLE - Details

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

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

	COVERED COMBINATION	SHORT STRADDLE
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 is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell Call Option, Sell Put Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

COVERED COMBINATION Vs SHORT STRADDLE - Risk & Reward

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

COVERED COMBINATION Vs SHORT STRADDLE - Strategy Pros & Cons

	COVERED COMBINATION	SHORT STRADDLE
Similar Strategies	Stock Repair Strategy	Short Strangle
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .