COVERED COMBINATION	SHORT GUTS
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..	Short Guts Option Strategy  This strategy is implemented by a trader when he is neutral on the movements and bearish on volatility i.e. he expects the stock to be range bound in the near future. This strategy involves sale of 1 ITM Call Option and 1 ITM Put Option. This strategy can be called as Credit Spread since his account is credited at the time of entering in the positions. < .. Read more..

COVERED COMBINATION Vs SHORT GUTS - Details

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

COVERED COMBINATION Vs SHORT GUTS - When & How to use ?

	COVERED COMBINATION	SHORT GUTS
Market View	Bullish	Neutral
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 implemented by a trader when he is neutral on the movements and bearish on volatility i.e. he expects the stock to be range bound in the near future.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell 1 ITM Call, Sell 1 ITM Put
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Upper Breakeven Point = Net Premium Received + Strike Price of Short Call, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

COVERED COMBINATION Vs SHORT GUTS - Risk & Reward

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

COVERED COMBINATION Vs SHORT GUTS - Strategy Pros & Cons

	COVERED COMBINATION	SHORT GUTS
Similar Strategies	Stock Repair Strategy	Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• Unlimited potential loss if the underlying stock continues to move in one direction. • High margin required.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Ability to profit even when underlying asset stays stagnant. • You are already paid your full profit the moment the position is put on as this is a credit spread position. • Higher chance of ending in full profit as compared to short strangle or short straddle.