COVERED COMBINATION	COVERED CALL
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..	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..

COVERED COMBINATION Vs COVERED CALL - Details

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

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

	COVERED COMBINATION	COVERED CALL
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.	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 1 OTM Call, Sell 1 OTM Put	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Purchase Price of Underlying- Premium Received

COVERED COMBINATION Vs COVERED CALL - Risk & Reward

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

COVERED COMBINATION Vs COVERED CALL - Strategy Pros & Cons

	COVERED COMBINATION	COVERED CALL
Similar Strategies	Stock Repair Strategy	Bull Call Spread
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• 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.