STRAP	COVERED COMBINATION
About Strategy	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin 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..

STRAP Vs COVERED COMBINATION - Details

	STRAP	COVERED COMBINATION
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Beginners	Advance
Reward Profile	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid	Limited
Risk Profile	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts	Unlimited
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

STRAP Vs COVERED COMBINATION - When & How to use ?

	STRAP	COVERED COMBINATION
Market View	Neutral	Bullish
When to use?	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.	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	Buy 2 ATM Call Option, Buy 1 ATM Put Option	Sell 1 OTM Call, Sell 1 OTM Put
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	(Purchase Price of Underlying + Strike Price of Short Put - Net Premium Received) / 2

STRAP Vs COVERED COMBINATION - Risk & Reward

	STRAP	COVERED COMBINATION
Maximum Profit Scenario	UNLIMITED	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	Unlimited	Limited

STRAP Vs COVERED COMBINATION - Strategy Pros & Cons

	STRAP	COVERED COMBINATION
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	Stock Repair Strategy
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	Combinations can be profitable in sideways or rising markets. Greater combined net credit increases downside protection and potential return.
Advantages	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.	Limited Maximum Profit on the upside. Covered Combinations should only be traded on stocks that are bullish.