PROTECTIVE PUT	COVERED CALL
About Strategy	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..	Covered Call Option Strategy Mr. X owns Reliance Shares and expects the price to rise in the near future. Mr. X is entitled to receive dividends for the shares he hold in cash market. Covered Call Strategy involves selling of OTM Call Option of the same underlying asset. The OTM Call Option Strike Price will generally be the price, where Mr. X will look to get out o .. Read more..

PROTECTIVE PUT Vs COVERED CALL - Details

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

PROTECTIVE PUT Vs COVERED CALL - When & How to use ?

	PROTECTIVE PUT	COVERED CALL
Market View	Bullish	Bullish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	An investor has a short term neutral view on the asset and for this reason holds the asset long and has a short position to generate income.
Action	Buy 1 ATM Put	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Purchase Price of Underlying + Premium Paid	Purchase Price of Underlying- Premium Received

PROTECTIVE PUT Vs COVERED CALL - Risk & Reward

	PROTECTIVE PUT	COVERED CALL
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Limited	Unlimited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs COVERED CALL - Strategy Pros & Cons

	PROTECTIVE PUT	COVERED CALL
Similar Strategies	Long Call, Call Backspread	Bull Call Spread
Disadvantage	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.	• Profit from option premium, rise in the underlying stock and dividends on the stock. • Allows you to generate income from your holding. • Profit when underlying stock price rise, move sideways or marginal fall.