LONG PUT BUTTERFLY	COVERED COMBINATION
About Strategy	Long Put Butterfly Option Strategy  The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. This strategy involves sale of 2 ATM Put Options, buy 1 ITM and 1 OTM Put Option. The risk and reward are limited. 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..

LONG PUT BUTTERFLY Vs COVERED COMBINATION - Details

	LONG PUT BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
Type (CE/PE)	PE (Put Option)	CE (Call Option) + PE (Put Option)
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 Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG PUT BUTTERFLY Vs COVERED COMBINATION - When & How to use ?

	LONG PUT BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near 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	Buy 1 OTM Put, Sell 2 ATM Puts, Buy 1 ITM Put	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG PUT BUTTERFLY Vs COVERED COMBINATION - Risk & Reward

	LONG PUT BUTTERFLY	COVERED COMBINATION
Maximum Profit Scenario	Strike Price of Higher Strike Long Put - Strike Price of Short Put - Net Premium Paid - Commissions Paid	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	When Price of Underlying <= Strike Price of Lower Strike Long Put OR Price of Underlying >= Strike Price of Higher Strike Long Put	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Limited	Limited

LONG PUT BUTTERFLY Vs COVERED COMBINATION - Strategy Pros & Cons

	LONG PUT BUTTERFLY	COVERED COMBINATION
Similar Strategies	Iron Condors, Iron Butterfly	Stock Repair Strategy
Disadvantage	• Risk is higher than reward. • When the underlying price is in between the two breakeven points, time decay hurts the position.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Limited maximum loss. • Unlimited profit potential, risk only limited to loss of premium. • Benefits from low volatility.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.