SHORT PUT	COVERED COMBINATION
About Strategy	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 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 Vs COVERED COMBINATION - Details

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

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

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

SHORT PUT Vs COVERED COMBINATION - Risk & Reward

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

SHORT PUT Vs COVERED COMBINATION - Strategy Pros & Cons

	SHORT PUT	COVERED COMBINATION
Similar Strategies	Bull Put Spread, Short Starddle	Stock Repair Strategy
Disadvantage	• Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• 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.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.