SHORT STRANGLE	COVERED CALL
About Strategy	Short Strangle Option Strategy  This strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if 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..

SHORT STRANGLE Vs COVERED CALL - Details

	SHORT STRANGLE	COVERED CALL
Market View	Neutral	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	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Purchase Price of Underlying- Premium Received

SHORT STRANGLE Vs COVERED CALL - When & How to use ?

	SHORT STRANGLE	COVERED CALL
Market View	Neutral	Bullish
When to use?	This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile.	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 OTM Call, Sell OTM Put	(Buy Underlying) (Sell OTM Call Option)
Breakeven Point	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Purchase Price of Underlying- Premium Received

SHORT STRANGLE Vs COVERED CALL - Risk & Reward

	SHORT STRANGLE	COVERED CALL
Maximum Profit Scenario	Maximum Profit = Net Premium Received	[Call Strike Price - Stock Price Paid] + Premium Received
Maximum Loss Scenario	Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received	Purchase Price of Underlying - Price of Underlying) + Premium Received
Risk	Unlimited	Unlimited
Reward	Limited	Limited

SHORT STRANGLE Vs COVERED CALL - Strategy Pros & Cons

	SHORT STRANGLE	COVERED CALL
Similar Strategies	Short Straddle, Long Strangle	Bull Call Spread
Disadvantage	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.
Advantages	• Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range.	• 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.