IRON BUTTERFLY	COVERED PUT
About Strategy	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..	Covered Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the .. Read more..

IRON BUTTERFLY Vs COVERED PUT - Details

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

IRON BUTTERFLY Vs COVERED PUT - When & How to use ?

	IRON BUTTERFLY	COVERED PUT
Market View	Neutral	Bearish
When to use?	This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements.	The Covered Put works well when the market is moderately Bearish.
Action	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call	Sell Underlying Sell OTM Put Option
Breakeven Point	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received	Futures Price + Premium Received

IRON BUTTERFLY Vs COVERED PUT - Risk & Reward

	IRON BUTTERFLY	COVERED PUT
Maximum Profit Scenario	Net Premium Received - Commissions Paid	The profit happens when the price of the underlying moves above strike price of Short Put.
Maximum Loss Scenario	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid	Price of Underlying - Sale Price of Underlying - Premium Received
Risk	Limited	Unlimited
Reward	Limited	Limited

IRON BUTTERFLY Vs COVERED PUT - Strategy Pros & Cons

	IRON BUTTERFLY	COVERED PUT
Similar Strategies	Long Put Butterfly, Neutral Calendar Spread	Bear Put Spread, Bear Call Spread
Disadvantage	• Large commissions involved. • Probability of losses are higher.	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.
Advantages	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.