LONG CALL BUTTERFLY	COVERED COMBINATION
About Strategy	Long Call Butterfly Option Strategy A trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho 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 CALL BUTTERFLY Vs COVERED COMBINATION - Details

	LONG CALL BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	4	2
Strategy Level	Advance	Advance
Reward Profile	Limited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

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

	LONG CALL BUTTERFLY	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This strategy should be used when you're expecting no volatility in the price of the underlying.	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	Sell 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

LONG CALL BUTTERFLY Vs COVERED COMBINATION - Risk & Reward

	LONG CALL BUTTERFLY	COVERED COMBINATION
Maximum Profit Scenario	Adjacent strikes - Net premium debit.	Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received - Commissions Paid
Maximum Loss Scenario	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	Limited	Limited

LONG CALL BUTTERFLY Vs COVERED COMBINATION - Strategy Pros & Cons

	LONG CALL BUTTERFLY	COVERED COMBINATION
Similar Strategies	-	Stock Repair Strategy
Disadvantage	• Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.