COVERED CALL	RISK REVERSAL
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..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

COVERED CALL Vs RISK REVERSAL - Details

	COVERED CALL	RISK REVERSAL
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	2
Strategy Level	Advance	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Purchase Price of Underlying- Premium Received	Premium received - Put Strike Price

COVERED CALL Vs RISK REVERSAL - When & How to use ?

	COVERED CALL	RISK REVERSAL
Market View	Bullish	Bullish
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.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	(Buy Underlying) (Sell OTM Call Option)	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Purchase Price of Underlying- Premium Received	Premium received - Put Strike Price

COVERED CALL Vs RISK REVERSAL - Risk & Reward

	COVERED CALL	RISK REVERSAL
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	You have nearly unlimited downside risk as well because you are short the put
Risk	Unlimited	Unlimited
Reward	Limited	Unlimited

COVERED CALL Vs RISK REVERSAL - Strategy Pros & Cons

	COVERED CALL	RISK REVERSAL
Similar Strategies	Bull Call Spread	-
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	Unlimited Risk.
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.	Unlimited profit.