STRIP	COVERED COMBINATION
About Strategy	Strip Option Strategy Strip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the 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..

STRIP Vs COVERED COMBINATION - Details

	STRIP	COVERED COMBINATION
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Beginners	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

STRIP Vs COVERED COMBINATION - When & How to use ?

	STRIP	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	When a trader is bearish on the market and bullish on volatility then he will implement this strategy.	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 ATM Call, Buy 2 ATM Puts	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

STRIP Vs COVERED COMBINATION - Risk & Reward

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

STRIP Vs COVERED COMBINATION - Strategy Pros & Cons

	STRIP	COVERED COMBINATION
Similar Strategies	Strap, Short Put Ladder	Stock Repair Strategy
Disadvantage	Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.