COVERED PUT	RATIO PUT SPREAD
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..	Ratio Put Spread Option Strategy  This strategy involves buying ITM Puts and simultaneously selling OTM Puts, double the number of ITM Puts. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. Read more..

COVERED PUT Vs RATIO PUT SPREAD - Details

	COVERED PUT	RATIO PUT SPREAD
Market View	Bearish	Neutral
Type (CE/PE)	PE (Put Option) + Underlying	PE (Put Option)
Number Of Positions	2	3
Strategy Level	Advance	Beginners
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Futures Price + Premium Received	Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

COVERED PUT Vs RATIO PUT SPREAD - When & How to use ?

	COVERED PUT	RATIO PUT SPREAD
Market View	Bearish	Neutral
When to use?	The Covered Put works well when the market is moderately Bearish.	This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action	Sell Underlying Sell OTM Put Option	Buy 1 ITM Put, Sell 2 OTM Puts
Breakeven Point	Futures Price + Premium Received	Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

COVERED PUT Vs RATIO PUT SPREAD - Risk & Reward

	COVERED PUT	RATIO PUT SPREAD
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	Strike Price of Long Put - Strike Price of Short Put + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Strike Price of Short - Price of Underlying - Max Profit + Commissions Paid
Risk	Unlimited	Unlimited
Reward	Limited	Limited

COVERED PUT Vs RATIO PUT SPREAD - Strategy Pros & Cons

	COVERED PUT	RATIO PUT SPREAD
Similar Strategies	Bear Put Spread, Bear Call Spread	Short Straddle (Sell Straddle), Short Strangle (Sell Strangle)
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Unlimited potential risk. • Limited profit.
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.	• Directional strategy so that there is either no upside or downside risk. • Able to profit even if trader is neutral on the market. • Higher probability of profit.