COVERED CALL	STRAP
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..	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 CALL Vs STRAP - Details

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

COVERED CALL Vs STRAP - When & How to use ?

	COVERED CALL	STRAP
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 used when the investor is bullish on the stock and expects volatility in the near future.
Action	(Buy Underlying) (Sell OTM Call Option)	Buy 2 ATM Call Option, Buy 1 ATM Put Option
Breakeven Point	Purchase Price of Underlying- Premium Received	Strike Price of Calls/Puts + (Net Premium Paid/2)

COVERED CALL Vs STRAP - Risk & Reward

	COVERED CALL	STRAP
Maximum Profit Scenario	[Call Strike Price - Stock Price Paid] + Premium Received	UNLIMITED
Maximum Loss Scenario	Purchase Price of Underlying - Price of Underlying) + Premium Received	Net Premium Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

COVERED CALL Vs STRAP - Strategy Pros & Cons

	COVERED CALL	STRAP
Similar Strategies	Bull Call Spread	Strip, Short Put Ladder, Short Call Ladder
Disadvantage	• Unlimited risk, limited reward. • Inability to earn interest on the proceed used to buy the underlying stock.	• To generate profit, there should be significant change in share price. • Expensive strategy.
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.	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.