LONG PUT	COVERED COMBINATION
About Strategy	Long Put Option Strategy This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. Risk: The maximum loss will be the premium amount paid.< 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 Vs COVERED COMBINATION - Details

	LONG PUT	COVERED COMBINATION
Market View	Bearish	Bullish
Type (CE/PE)	PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	1	2
Strategy Level	Beginners	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Strike Price of Long Put - Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

	LONG PUT	COVERED COMBINATION
Market View	Bearish	Bullish
When to use?	A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in 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 Put Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Strike Price of Long Put - Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG PUT Vs COVERED COMBINATION - Risk & Reward

	LONG PUT	COVERED COMBINATION
Maximum Profit Scenario	Profit = Strike Price of Long Put - Premium Paid	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Max Loss = 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

LONG PUT Vs COVERED COMBINATION - Strategy Pros & Cons

	LONG PUT	COVERED COMBINATION
Similar Strategies	Protective Call, Short Put	Stock Repair Strategy
Disadvantage	• 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.