COVERED CALL	CALL BACKSPREAD
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..	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r .. Read more..

COVERED CALL Vs CALL BACKSPREAD - Details

	COVERED CALL	CALL BACKSPREAD
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option)	CE (Call Option)
Number Of Positions	2	3
Strategy Level	Advance	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	Purchase Price of Underlying- Premium Received	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

COVERED CALL Vs CALL BACKSPREAD - When & How to use ?

	COVERED CALL	CALL BACKSPREAD
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 is used when the investor expects the price of the stock to rise in the future.
Action	(Buy Underlying) (Sell OTM Call Option)	Sell 1 ITM Call, BUY 2 OTM Call
Breakeven Point	Purchase Price of Underlying- Premium Received	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

COVERED CALL Vs CALL BACKSPREAD - Risk & Reward

	COVERED CALL	CALL BACKSPREAD
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Unlimited profit potential if the stock goes in upward direction.
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Strike Price of long call - Strike Price of short call - Net premium received
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED CALL Vs CALL BACKSPREAD - Strategy Pros & Cons

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