STRAP	COVERED PUT
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 Put Option Strategy  This strategy is exactly opposite to Covered Call Strategy. Here the investor is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the .. Read more..

STRAP Vs COVERED PUT - Details

	STRAP	COVERED PUT
Market View	Neutral	Bearish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	PE (Put Option) + Underlying
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)	Futures Price + Premium Received

STRAP Vs COVERED PUT - When & How to use ?

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

STRAP Vs COVERED PUT - Risk & Reward

	STRAP	COVERED PUT
Maximum Profit Scenario	UNLIMITED	The profit happens when the price of the underlying moves above strike price of Short Put.
Maximum Loss Scenario	Net Premium Paid	Price of Underlying - Sale Price of Underlying - Premium Received
Risk	Limited	Unlimited
Reward	Unlimited	Limited

STRAP Vs COVERED PUT - Strategy Pros & Cons

	STRAP	COVERED PUT
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	Bear Put Spread, Bear Call Spread
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	• Limited profit, unlimited risk. • Trader should have enough experience before using this strategy.
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.	• Investors can book profit when underlying stock price drop, move sideways or rises by a small amount. • Able to generate monthly income. • Able to generate profit from fall in prices or mild increase in the prices.