COVERED COMBINATION	SHORT CALL
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 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 Vs SHORT CALL - Details

	COVERED COMBINATION	SHORT CALL
Market View	Bullish	Bearish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	2	1
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	Strike Price of Short Call + Premium Received

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

	COVERED COMBINATION	SHORT CALL
Market View	Bullish	Bearish
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.	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.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell or Write Call Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Strike Price of Short Call + Premium Received

COVERED COMBINATION Vs SHORT CALL - Risk & Reward

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

COVERED COMBINATION Vs SHORT CALL - Strategy Pros & Cons

	COVERED COMBINATION	SHORT CALL
Similar Strategies	Stock Repair Strategy	Covered Put, Covered Calls
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited risk to the upside underlying stocks. • Potential loss more than the premium collected.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• 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.