SHORT CALL BUTTERFLY	COVERED CALL
About Strategy	Short Call Butterfly Option Strategy This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the 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..

SHORT CALL BUTTERFLY Vs COVERED CALL - Details

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

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

	SHORT CALL BUTTERFLY	COVERED CALL
Market View	Neutral	Bullish
When to use?	This strategy is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.	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	Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium	Purchase Price of Underlying- Premium Received

SHORT CALL BUTTERFLY Vs COVERED CALL - Risk & Reward

	SHORT CALL BUTTERFLY	COVERED CALL
Maximum Profit Scenario	The profit is limited to the net premium received.	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Higher strike price- Lower Strike Price - Net Premium	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Limited	Unlimited
Reward	Limited	Limited

SHORT CALL BUTTERFLY Vs COVERED CALL - Strategy Pros & Cons

	SHORT CALL BUTTERFLY	COVERED CALL
Similar Strategies	Long Straddle, Long Call Butterfly	Bull Call Spread
Disadvantage	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	• Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted.	• 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.