COVERED PUT	IRON 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..	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 PUT Vs IRON BUTTERFLY - Details

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

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

	COVERED PUT	IRON BUTTERFLY
Market View	Bearish	Neutral
When to use?	The Covered Put works well when the market is moderately Bearish.	This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	Sell Underlying Sell OTM Put Option	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Futures Price + Premium Received	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

COVERED PUT Vs IRON BUTTERFLY - Risk & Reward

	COVERED PUT	IRON BUTTERFLY
Maximum Profit Scenario	The profit happens when the price of the underlying moves above strike price of Short Put.	Net Premium Received - Commissions Paid
Maximum Loss Scenario	Price of Underlying - Sale Price of Underlying - Premium Received	Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED PUT Vs IRON BUTTERFLY - Strategy Pros & Cons

	COVERED PUT	IRON BUTTERFLY
Similar Strategies	Bear Put Spread, Bear Call Spread	Long Put Butterfly, Neutral Calendar Spread
Disadvantage	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.	• Large commissions involved. • Probability of losses are higher.
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.	• 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.