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 Put 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 Put 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 Put Spread comparison:
| Comparison Aspect | Bear Put Spread | Covered Call |
| View |  |  |
| Strategy Introduction | Bear Put Spread is a type of vertical spread wherein buys a put option hoping to make a profit due to the market decline, and at the same time writes another put option with...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 | If the prices fall as expected, the trader can make profits and limit his losses, but if the prices fall far more than expected then the trader won’t be able to make any profit. | 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 | Put | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | Buy ITM Put, Sell OTM Put | Sell Call Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price of Long Put MINUS Net Premium | Strike Price MINUS Premium |
| Investor Intention | Let Put Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Market Prices to go Down | Limited Price Movements |
| Strategy Summary | Limit Your Losses | Cautious |
| Advantages | Limited Risk, Capped Losses | Generates Steady Income |
| Disadvantages | Limited Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | NA |
| More Comparisons | Bear Put Spread Vs Short Put | Covered Call Vs Short Put |
| Bear Put Spread Vs Long Combo | Covered Call Vs Long Combo | |
| Bear Put Spread Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Bear Put Spread Vs Long Put | Covered Call Vs Short Call | |
| Bear Put Spread Vs Long Call | Covered Call Vs Long Call | |
| Bear Put Spread Vs Covered Call | Covered Call Vs Long Put | |
| Bear Put Spread Vs Covered Put | Covered Call Vs Covered Put | |
| Bear Put Spread Vs Protective Call | Covered Call Vs Protective Call | |
| Bear Put Spread Vs Short Box | Covered Call Vs Short Box | |
| Bear Put Spread Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Bear Put Spread Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Bear Put Spread Vs Box Spread | Covered Call Vs Box Spread | |
| Bear Put Spread Vs Short Strangle | Covered Call Vs Short Strangle | |
| Bear Put Spread Vs Long Strangle | Covered Call Vs Long Strangle | |
| Bear Put Spread Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Bear Put Spread Vs Long Straddle | Covered Call Vs Long Straddle | |
| Bear Put Spread Vs Short Straddle | Covered Call Vs Short Straddle | |
| Bear Put Spread Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Bear Put Spread Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Bear Put Spread Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Bear Put Spread Vs Short Call | Covered Call Vs Bear Put Spread | |
| Bear Put Spread Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Bear Put Spread Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Bear Put Spread option strategies.
At the same time, if you are looking to make some money from a market decline and can take some basic risk – then Bear Put Spread options strategy makes sense to you.
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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