COVERED CALL	IRON BUTTERFLY
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..	Iron Butterfly Option Strategy  This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk. Read more..

COVERED CALL Vs IRON BUTTERFLY - Details

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

COVERED CALL Vs IRON BUTTERFLY - When & How to use ?

	COVERED CALL	IRON BUTTERFLY
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 implemented when a trader is bearish on the volatility of market and neutral on the market movements.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call
Breakeven Point	Purchase Price of Underlying- Premium Received	Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

COVERED CALL Vs IRON BUTTERFLY - Risk & Reward

	COVERED CALL	IRON BUTTERFLY
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Net Premium Received - Commissions Paid
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 + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED CALL Vs IRON BUTTERFLY - Strategy Pros & Cons

	COVERED CALL	IRON BUTTERFLY
Similar Strategies	Bull Call Spread	Long Put Butterfly, Neutral Calendar Spread
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Large commissions involved. • Probability of losses are higher.
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.	• Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily.