PROTECTIVE PUT	COVERED COMBINATION
About Strategy	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. 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..

PROTECTIVE PUT Vs COVERED COMBINATION - Details

	PROTECTIVE 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	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

	PROTECTIVE PUT	COVERED COMBINATION
Market View	Bullish	Bullish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	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 ATM Put	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Purchase Price of Underlying + Premium Paid	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

PROTECTIVE PUT Vs COVERED COMBINATION - Risk & Reward

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

PROTECTIVE PUT Vs COVERED COMBINATION - Strategy Pros & Cons

	PROTECTIVE PUT	COVERED COMBINATION
Similar Strategies	Long Call, Call Backspread	Stock Repair Strategy
Disadvantage	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.