COVERED CALL	PROTECTIVE PUT
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..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

COVERED CALL Vs PROTECTIVE PUT - Details

	COVERED CALL	PROTECTIVE PUT
Market View	Bullish	Bullish
Type (CE/PE)	CE (Call Option)	PE (Put Option)
Number Of Positions	2	1
Strategy Level	Advance	Beginners
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Limited
Breakeven Point	Purchase Price of Underlying- Premium Received	Purchase Price of Underlying + Premium Paid

COVERED CALL Vs PROTECTIVE PUT - When & How to use ?

	COVERED CALL	PROTECTIVE PUT
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 adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 1 ATM Put
Breakeven Point	Purchase Price of Underlying- Premium Received	Purchase Price of Underlying + Premium Paid

COVERED CALL Vs PROTECTIVE PUT - Risk & Reward

	COVERED CALL	PROTECTIVE PUT
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED CALL Vs PROTECTIVE PUT - Strategy Pros & Cons

	COVERED CALL	PROTECTIVE PUT
Similar Strategies	Bull Call Spread	Long Call, Call Backspread
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
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 potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.