SHORT STRANGLE	COVERED COMBINATION
About Strategy	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 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 Vs COVERED COMBINATION - Details

	SHORT STRANGLE	COVERED COMBINATION
Market View	Neutral	Bullish
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	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

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

SHORT STRANGLE Vs COVERED COMBINATION - Risk & Reward

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

SHORT STRANGLE Vs COVERED COMBINATION - Strategy Pros & Cons

	SHORT STRANGLE	COVERED COMBINATION
Similar Strategies	Short Straddle, Long Strangle	Stock Repair Strategy
Disadvantage	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• 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.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.