COVERED CALL	SHORT CALL 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..	Short Call Butterfly Option Strategy This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the .. Read more..

COVERED CALL Vs SHORT CALL BUTTERFLY - Details

	COVERED CALL	SHORT CALL BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option)	CE (Call 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	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

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

	COVERED CALL	SHORT CALL 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 meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call
Breakeven Point	Purchase Price of Underlying- Premium Received	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

COVERED CALL Vs SHORT CALL BUTTERFLY - Risk & Reward

	COVERED CALL	SHORT CALL BUTTERFLY
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	The profit is limited to the net premium received.
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Higher strike price- Lower Strike Price - Net Premium
Risk	Unlimited	Limited
Reward	Limited	Limited

COVERED CALL Vs SHORT CALL BUTTERFLY - Strategy Pros & Cons

	COVERED CALL	SHORT CALL BUTTERFLY
Similar Strategies	Bull Call Spread	Long Straddle, Long Call Butterfly
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.
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.	• Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted.