COVERED COMBINATION	CALL BACKSPREAD
About Strategy	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..	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r .. Read more..

COVERED COMBINATION Vs CALL BACKSPREAD - Details

	COVERED COMBINATION	CALL BACKSPREAD
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	2	3
Strategy Level	Advance	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

COVERED COMBINATION Vs CALL BACKSPREAD - When & How to use ?

	COVERED COMBINATION	CALL BACKSPREAD
Market View	Bullish	Bullish
When to use?	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.	This strategy is used when the investor expects the price of the stock to rise in the future.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell 1 ITM Call, BUY 2 OTM Call
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

COVERED COMBINATION Vs CALL BACKSPREAD - Risk & Reward

	COVERED COMBINATION	CALL BACKSPREAD
Maximum Profit Scenario	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid	Unlimited profit potential if the stock goes in upward direction.
Maximum Loss Scenario	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid	Strike Price of long call - Strike Price of short call - Net premium received
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED COMBINATION Vs CALL BACKSPREAD - Strategy Pros & Cons

	COVERED COMBINATION	CALL BACKSPREAD
Similar Strategies	Stock Repair Strategy	-
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Unlimited profit potential.