RISK REVERSAL	COVERED CALL
About Strategy	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod Read more..	Covered Call Option Strategy Mr. X owns Reliance Shares and expects the price to rise in the near future. Mr. X is entitled to receive dividends for the shares he hold in cash market. Covered Call Strategy involves selling of OTM Call Option of the same underlying asset. The OTM Call Option Strike Price will generally be the price, where Mr. X will look to get out o .. Read more..

RISK REVERSAL Vs COVERED CALL - Details

	RISK REVERSAL	COVERED CALL
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	2	2
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Premium received - Put Strike Price	Purchase Price of Underlying- Premium Received

RISK REVERSAL Vs COVERED CALL - When & How to use ?

	RISK REVERSAL	COVERED CALL
Market View	Bullish	Bullish
When to use?	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.	An investor has a short term neutral view on the asset and for this reason holds the asset long and has a short position to generate income.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Premium received - Put Strike Price	Purchase Price of Underlying- Premium Received

RISK REVERSAL Vs COVERED CALL - Risk & Reward

	RISK REVERSAL	COVERED CALL
Maximum Profit Scenario	You have unlimited profit potential to the upside.	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Unlimited	Unlimited
Reward	Unlimited	Limited

RISK REVERSAL Vs COVERED CALL - Strategy Pros & Cons

	RISK REVERSAL	COVERED CALL
Similar Strategies	-	Bull Call Spread
Disadvantage	Unlimited Risk.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	Unlimited profit.	• Profit from option premium, rise in the underlying stock and dividends on the stock. • Allows you to generate income from your holding. • Profit when underlying stock price rise, move sideways or marginal fall.