COVERED COMBINATION	RISK REVERSAL
About Strategy	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..	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 COMBINATION Vs RISK REVERSAL - Details

	COVERED COMBINATION	RISK REVERSAL
Market View	Bullish	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	Unlimited
Risk Profile	Unlimited	Unlimited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Premium received - Put Strike Price

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

	COVERED COMBINATION	RISK REVERSAL
Market View	Bullish	Bullish
When to use?	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.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Sell 1 OTM Call, Sell 1 OTM Put	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Premium received - Put Strike Price

COVERED COMBINATION Vs RISK REVERSAL - Risk & Reward

	COVERED COMBINATION	RISK REVERSAL
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	You have nearly unlimited downside risk as well because you are short the put
Risk	Unlimited	Unlimited
Reward	Limited	Unlimited

COVERED COMBINATION Vs RISK REVERSAL - Strategy Pros & Cons

	COVERED COMBINATION	RISK REVERSAL
Similar Strategies	Stock Repair Strategy	-
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	Unlimited Risk.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	Unlimited profit.