SHORT PUT	COVERED CALL
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 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..

SHORT PUT Vs COVERED CALL - Details

	SHORT 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	Limited	Limited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Strike Price - Premium	Purchase Price of Underlying- Premium Received

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

	SHORT PUT	COVERED CALL
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.	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	Sell Put Option	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Strike Price - Premium	Purchase Price of Underlying- Premium Received

SHORT PUT Vs COVERED CALL - Risk & Reward

	SHORT PUT	COVERED CALL
Maximum Profit Scenario	Premium received in your account when you sell the Put Option.	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Unlimited (When the price of the underlying falls.)	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Unlimited	Unlimited
Reward	Limited	Limited

SHORT PUT Vs COVERED CALL - Strategy Pros & Cons

	SHORT PUT	COVERED CALL
Similar Strategies	Bull Put Spread, Short Starddle	Bull Call Spread
Disadvantage	• Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
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.	• 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.