COVERED PUT	CALL BACKSPREAD
About Strategy	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..	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 PUT Vs CALL BACKSPREAD - Details

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

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

	COVERED PUT	CALL BACKSPREAD
Market View	Bearish	Bullish
When to use?	The Covered Put works well when the market is moderately Bearish.	This strategy is used when the investor expects the price of the stock to rise in the future.
Action	Sell Underlying Sell OTM Put Option	Sell 1 ITM Call, BUY 2 OTM Call
Breakeven Point	Futures Price + Premium Received	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

COVERED PUT Vs CALL BACKSPREAD - Risk & Reward

	COVERED PUT	CALL BACKSPREAD
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	Unlimited profit potential if the stock goes in upward direction.
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Strike Price of long call - Strike Price of short call - Net premium received
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED PUT Vs CALL BACKSPREAD - Strategy Pros & Cons

	COVERED PUT	CALL BACKSPREAD
Similar Strategies	Bear Put Spread, Bear Call Spread	-
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.
Advantages	• 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.	• Unlimited profit potential.