IRON BUTTERFLY	COVERED COMBINATION
About Strategy	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. 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..

IRON BUTTERFLY Vs COVERED COMBINATION - Details

	IRON BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	4	2
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

IRON BUTTERFLY Vs COVERED COMBINATION - When & How to use ?

	IRON BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements.	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 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

IRON BUTTERFLY Vs COVERED COMBINATION - Risk & Reward

	IRON BUTTERFLY	COVERED COMBINATION
Maximum Profit Scenario	Net Premium Received - Commissions Paid	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Limited	Limited

IRON BUTTERFLY Vs COVERED COMBINATION - Strategy Pros & Cons

	IRON BUTTERFLY	COVERED COMBINATION
Similar Strategies	Long Put Butterfly, Neutral Calendar Spread	Stock Repair Strategy
Disadvantage	• Large commissions involved. • Probability of losses are higher.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.