CALL BACKSPREAD	COVERED COMBINATION
About Strategy	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r Read more..	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..

CALL BACKSPREAD Vs COVERED COMBINATION - Details

	CALL BACKSPREAD	COVERED COMBINATION
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

	CALL BACKSPREAD	COVERED COMBINATION
Market View	Bullish	Bullish
When to use?	This strategy is used when the investor expects the price of the stock to rise in the future.	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.
Action	Sell 1 ITM Call, BUY 2 OTM Call	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

CALL BACKSPREAD Vs COVERED COMBINATION - Risk & Reward

	CALL BACKSPREAD	COVERED COMBINATION
Maximum Profit Scenario	Unlimited profit potential if the stock goes in upward direction.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Strike Price of long call - Strike Price of short call - Net premium received	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Unlimited	Limited

CALL BACKSPREAD Vs COVERED COMBINATION - Strategy Pros & Cons

	CALL BACKSPREAD	COVERED COMBINATION
Similar Strategies	-	Stock Repair Strategy
Disadvantage		Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Unlimited profit potential.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.