COVERED COMBINATION	SHORT PUT
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..	Short Put Option Strategy A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level. Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put. Read more..

COVERED COMBINATION Vs SHORT PUT - Details

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

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

	COVERED COMBINATION	SHORT PUT
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 works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell Put Option
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Strike Price - Premium

COVERED COMBINATION Vs SHORT PUT - Risk & Reward

	COVERED COMBINATION	SHORT PUT
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	Premium received in your account when you sell the Put Option.
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	Unlimited (When the price of the underlying falls.)
Risk	Unlimited	Unlimited
Reward	Limited	Limited

COVERED COMBINATION Vs SHORT PUT - Strategy Pros & Cons

	COVERED COMBINATION	SHORT PUT
Similar Strategies	Stock Repair Strategy	Bull Put Spread, Short Starddle
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.