COVERED CALL	LONG PUT BUTTERFLY
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..	Long Put Butterfly Option Strategy  The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. This strategy involves sale of 2 ATM Put Options, buy 1 ITM and 1 OTM Put Option. The risk and reward are limited. Read more..

COVERED CALL Vs LONG PUT BUTTERFLY - Details

	COVERED CALL	LONG PUT BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call 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- Premium Received	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

COVERED CALL Vs LONG PUT BUTTERFLY - When & How to use ?

	COVERED CALL	LONG PUT BUTTERFLY
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.	The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 1 OTM Put, Sell 2 ATM Puts, Buy 1 ITM Put
Breakeven Point	Purchase Price of Underlying- Premium Received	Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid

COVERED CALL Vs LONG PUT BUTTERFLY - Risk & Reward

	COVERED CALL	LONG PUT BUTTERFLY
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Strike Price of Higher Strike Long Put - Strike Price of Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	When Price of Underlying <= Strike Price of Lower Strike Long Put OR Price of Underlying >= Strike Price of Higher Strike Long Put
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED CALL Vs LONG PUT BUTTERFLY - Strategy Pros & Cons

	COVERED CALL	LONG PUT BUTTERFLY
Similar Strategies	Bull Call Spread	Iron Condors, Iron Butterfly
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Risk is higher than reward. • When the underlying price is in between the two breakeven points, time decay hurts 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.	• Limited maximum loss. • Unlimited profit potential, risk only limited to loss of premium. • Benefits from low volatility.