COVERED COMBINATION	SHORT STRANGLE
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 Strangle Option Strategy  This strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if .. Read more..

COVERED COMBINATION Vs SHORT STRANGLE - Details

	COVERED COMBINATION	SHORT STRANGLE
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	2
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	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium

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

	COVERED COMBINATION	SHORT STRANGLE
Market View	Bullish	Neutral
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.	This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell OTM Call, Sell OTM Put
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium

COVERED COMBINATION Vs SHORT STRANGLE - Risk & Reward

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

COVERED COMBINATION Vs SHORT STRANGLE - Strategy Pros & Cons

	COVERED COMBINATION	SHORT STRANGLE
Similar Strategies	Stock Repair Strategy	Short Straddle, Long Strangle
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range.