COVERED PUT	SHORT CALL BUTTERFLY
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..	Short Call Butterfly Option Strategy This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the .. Read more..

COVERED PUT Vs SHORT CALL BUTTERFLY - Details

	COVERED PUT	SHORT CALL BUTTERFLY
Market View	Bearish	Neutral
Type (CE/PE)	PE (Put Option) + Underlying	CE (Call Option)
Number Of Positions	2	4
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Futures Price + Premium Received	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

COVERED PUT Vs SHORT CALL BUTTERFLY - When & How to use ?

	COVERED PUT	SHORT CALL BUTTERFLY
Market View	Bearish	Neutral
When to use?	The Covered Put works well when the market is moderately Bearish.	This strategy is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.
Action	Sell Underlying Sell OTM Put Option	Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call
Breakeven Point	Futures Price + Premium Received	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

COVERED PUT Vs SHORT CALL BUTTERFLY - Risk & Reward

	COVERED PUT	SHORT CALL BUTTERFLY
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	The profit is limited to the net premium received.
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Higher strike price- Lower Strike Price - Net Premium
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED PUT Vs SHORT CALL BUTTERFLY - Strategy Pros & Cons

	COVERED PUT	SHORT CALL BUTTERFLY
Similar Strategies	Bear Put Spread, Bear Call Spread	Long Straddle, Long Call Butterfly
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.
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.	• Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted.