COVERED COMBINATION	SHORT PUT BUTTERFLY
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 Put Butterfly Option Strategy  In Short Put Butterfly strategy, a trader is neutral in nature and expects the market to remain range bound in the near future. A trader will buy 2 ATM Put Options; sell 1 ITM & 1 OTM Put Options. Here risk and returns both are limited. Risk:< .. Read more..

COVERED COMBINATION Vs SHORT PUT BUTTERFLY - Details

	COVERED COMBINATION	SHORT PUT BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option)
Number Of Positions	2	4
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Upper Breakeven Point = Strike Price of Highest Strike Short Put - Net Premium Received, Lower Breakeven Point = Strike Price of Lowest Strike Short Put + Net Premium Received

COVERED COMBINATION Vs SHORT PUT BUTTERFLY - When & How to use ?

	COVERED COMBINATION	SHORT PUT BUTTERFLY
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.	In Short Put Butterfly strategy, a trader is neutral in nature and expects the market to remain range bound in the near future.
Action	Sell 1 OTM Call, Sell 1 OTM Put	Sell 1 ITM Put, Buy 2 ATM Put, Sell 1 OTM Put
Breakeven Point	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2	Upper Breakeven Point = Strike Price of Highest Strike Short Put - Net Premium Received, Lower Breakeven Point = Strike Price of Lowest Strike Short Put + Net Premium Received

COVERED COMBINATION Vs SHORT PUT BUTTERFLY - Risk & Reward

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

COVERED COMBINATION Vs SHORT PUT BUTTERFLY - Strategy Pros & Cons

	COVERED COMBINATION	SHORT PUT BUTTERFLY
Similar Strategies	Stock Repair Strategy	Short Condor, Reverse Iron Condor
Disadvantage	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.	• High risk strategy and may cause huge losses if the price of the underlying stocks falls steeply. • Higher profit is only possible when shares get close to expiration.
Advantages	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.	• Benefits from time decay. • Traders can earn more in a rising or range bound scenario. • Benefits from a surge in volatility.