STRAP	COVERED CALL
About Strategy	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 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 Vs COVERED CALL - Details

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

STRAP Vs COVERED CALL - When & How to use ?

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

STRAP Vs COVERED CALL - Risk & Reward

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

STRAP Vs COVERED CALL - Strategy Pros & Cons

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