SHORT CALL BUTTERFLY	COVERED COMBINATION
About Strategy	Short Call Butterfly Option Strategy This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the 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..

SHORT CALL BUTTERFLY Vs COVERED COMBINATION - Details

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

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

	SHORT CALL BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This strategy is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.	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 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

SHORT CALL BUTTERFLY Vs COVERED COMBINATION - Risk & Reward

	SHORT CALL BUTTERFLY	COVERED COMBINATION
Maximum Profit Scenario	The profit is limited to the net premium received.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Higher strike price- Lower Strike Price - Net Premium	Purchase Price of Underlying + Strike Price of Short Put - (2 x Price of Underlying) - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Limited	Limited

SHORT CALL BUTTERFLY Vs COVERED COMBINATION - Strategy Pros & Cons

	SHORT CALL BUTTERFLY	COVERED COMBINATION
Similar Strategies	Long Straddle, Long Call Butterfly	Stock Repair Strategy
Disadvantage	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.