LONG STRADDLE	COVERED COMBINATION
About Strategy	Long Straddle Option Strategy  Straddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc 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..

LONG STRADDLE Vs COVERED COMBINATION - Details

	LONG STRADDLE	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	Beginners	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG STRADDLE Vs COVERED COMBINATION - When & How to use ?

	LONG STRADDLE	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations.	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	Buy Call Option, Buy Put Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG STRADDLE Vs COVERED COMBINATION - Risk & Reward

	LONG STRADDLE	COVERED COMBINATION
Maximum Profit Scenario	Max profit is achieved when at one option is exercised.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Maximum Loss = Net Premium Paid	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Unlimited	Limited

LONG STRADDLE Vs COVERED COMBINATION - Strategy Pros & Cons

	LONG STRADDLE	COVERED COMBINATION
Similar Strategies	Bear Put Spread	Stock Repair Strategy
Disadvantage	• There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.