LONG STRANGLE	COVERED COMBINATION
About Strategy	Long Strangle Option Strategy A Strangle is similar to Straddle. In Strangle, a trader will purchase one OTM Call Option and one OTM Put Option, of the same expiry date and the same underlying asset. This strategy will reduce the entry cost for trader and it is also cheaper than straddle. A trader will make profits, if the market moves sharply in either direction and gives extra-ordinary returns in 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..

LONG STRANGLE Vs COVERED COMBINATION - Details

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

LONG STRANGLE Vs COVERED COMBINATION - When & How to use ?

	LONG STRANGLE	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This strategy is used in 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 OTM Call Option, Buy OTM Put Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG STRANGLE Vs COVERED COMBINATION - Risk & Reward

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

LONG STRANGLE Vs COVERED COMBINATION - Strategy Pros & Cons

	LONG STRANGLE	COVERED COMBINATION
Similar Strategies	Long Straddle, Short Strangle	Stock Repair Strategy
Disadvantage	• Require significant price movement to book profit. • Traders can lose more money if the underlying asset stayed stagnant.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Able to book profit, no matter if the underlying asset goes in either direction. • Limited loss to the debit paid. • If the underlying asset continues to move in one direction then you can book Unlimited profit .	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.