COVERED CALL	STRIP
About Strategy	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..	Strip Option Strategy Strip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the .. Read more..

COVERED CALL Vs STRIP - Details

	COVERED CALL	STRIP
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	3
Strategy Level	Advance	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	Purchase Price of Underlying- Premium Received	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)

COVERED CALL Vs STRIP - When & How to use ?

	COVERED CALL	STRIP
Market View	Bullish	Neutral
When to use?	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.	When a trader is bearish on the market and bullish on volatility then he will implement this strategy.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 1 ATM Call, Buy 2 ATM Puts
Breakeven Point	Purchase Price of Underlying- Premium Received	Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2)

COVERED CALL Vs STRIP - Risk & Reward

	COVERED CALL	STRIP
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Price of Underlying - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - Price of Underlying) - Net Premium Paid
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Net Premium Paid + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED CALL Vs STRIP - Strategy Pros & Cons

	COVERED CALL	STRIP
Similar Strategies	Bull Call Spread	Strap, Short Put Ladder
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position.
Advantages	• 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.	Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving.