COVERED CALL	SHORT STRANGLE
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..	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 Vs SHORT STRANGLE - Details

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

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

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

COVERED CALL Vs SHORT STRANGLE - Risk & Reward

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

COVERED CALL Vs SHORT STRANGLE - Strategy Pros & Cons

	COVERED CALL	SHORT STRANGLE
Similar Strategies	Bull Call Spread	Short Straddle, Long Strangle
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.
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.	• 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.