When it comes to Options Trading, there are different complexities involved in terms of choosing a specific strategy that works the best for you.
At the same time, each strategy has its own set of advantages as well as limitations, thus making the concept of options trading even more challenging. Thus, in case you are looking to fit a particular strategy in your option trades, just check few areas before you make a choice.
In this detailed comparison of Covered Call Vs Bear Call Spread options trading strategies, we will be looking at the below-mentioned aspects and more:
- Current Market Position
- Your Risk Appetite
- Your Trading Experience
- Profit Potential
- Intention and Expectation of a trader
- Break-even point of your trade
Apart from the Covered Call Vs Bear Call Spread strategies, there are more than 25 comparisons of each of these strategies with other option strategies. With all these comparisons, you should be able to filter the ones that work the best for you.
Here is the detailed Covered Call Vs Bear Call Spread comparison:
| Comparison Aspect | Bear Call Spread | Covered Call |
| View |  |  |
| Strategy Introduction | The bear call spread consists of two calls, both with the same underlying asset and expiration date, but the strike price of the call options bought is less than the strike price of the same number of call options sold. Like most of the spread strategies, it is a limited-risk...more | In a Covered Call Strategy, the trader holds a long position in a security and at the same time, he writes the call options on the same security to generate income through premiums...more |
| Investor Obligation | As a thumb rule, the expiration date must be about 30-45 days away in order to be able to take advantage of the accelerating time decay. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Moderately Bearish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | Buy OTM Call, Sell OTM Call | Sell Call Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price of Short Call + Net Premium Received | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Market to go down gradually, but moderately | Limited Price Movements |
| Strategy Summary | Limited Risk Limited Profit | Cautious |
| Advantages | Profit when Market is going down, Limited Risk | Generates Steady Income |
| Disadvantages | Limited Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Bear Call Spread Vs Short Put | Covered Call Vs Short Put |
| Bear Call Spread Vs Long Combo | Covered Call Vs Long Combo | |
| Bear Call Spread Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Bear Call Spread Vs Long Put | Covered Call Vs Short Call | |
| Bear Call Spread Vs Long Call | Covered Call Vs Long Call | |
| Bear Call Spread Vs Covered Call | Covered Call Vs Long Put | |
| Bear Call Spread Vs Covered Put | Covered Call Vs Covered Put | |
| Bear Call Spread Vs Protective Call | Covered Call Vs Protective Call | |
| Bear Call Spread Vs Short Box | Covered Call Vs Short Box | |
| Bear Call Spread Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Bear Call Spread Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Bear Call Spread Vs Box Spread | Covered Call Vs Box Spread | |
| Bear Call Spread Vs Short Strangle | Covered Call Vs Short Strangle | |
| Bear Call Spread Vs Long Strangle | Covered Call Vs Long Strangle | |
| Bear Call Spread Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Bear Call Spread Vs Long Straddle | Covered Call Vs Long Straddle | |
| Bear Call Spread Vs Short Straddle | Covered Call Vs Short Straddle | |
| Bear Call Spread Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Bear Call Spread Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Bear Call Spread Vs Short Call | Covered Call Vs Bear Call Spread | |
| Bear Call Spread Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Bear Call Spread Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Bear Call Spread Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Bear Call Spread option strategies.
As the name suggests, if you are looking at a slightly bearish market position and are open for a little risk, then bear call spread is something you can try in your trades. Having said that, the profit you can expect is going to be on a relatively limited level while using this strategy.
This needs to be known that the profit you get using this strategy is also limited in scope.
However, if the market is moderately bullish or neutral with a high-risk appetite with a limitation on the profit – then you can opt for a covered call option strategy.
Furthermore, as told above, it also depends on the market situation.
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