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 Box 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 Box 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 Box Spread comparison:
| Comparison Aspect | Box Spread | Covered Call |
| View |  |  |
| Strategy Introduction | Box Spread is an arbitrage strategy in which two complementary positions are taken that balance out the risk of each other. This makes the box spread an almost risk-free strategy...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 | The trader has the obligation to keep the positions open till they reach their respective expirations. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Neutral | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call, Put | Call |
| Number of Positions | 4 | 2 (Underlying & Call) |
| Action Needed | 1 Long ITM Call, 1 Short OTM Call, 1 Long ITM Put, 1 Short OTM Put | Sell Call Option |
| Risk for You | None | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | NA | Strike Price MINUS Premium |
| Investor Intention | Choose the Correct Stike Prices | Make Money from Premium Received |
| Investor Expectation | Short-term demand shifts of the options in the market. | Limited Price Movements |
| Strategy Summary | Complicated | Cautious |
| Advantages | Risk Free, Direction Neutral | Generates Steady Income |
| Disadvantages | Limited Profit, High Margin Maintenance, Positions cannot be closed before expiry. | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 0 | 1 |
| Also called as | NA | NA |
| More Comparisons | Box Spread Vs Short Put | Covered Call Vs Short Put |
| Box Spread Vs Long Combo | Covered Call Vs Long Combo | |
| Box Spread Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Box Spread Vs Long Put | Covered Call Vs Short Call | |
| Box Spread Vs Long Call | Covered Call Vs Long Call | |
| Box Spread Vs Covered Call | Covered Call Vs Long Put | |
| Box Spread Vs Covered Put | Covered Call Vs Covered Put | |
| Box Spread Vs Protective Call | Covered Call Vs Protective Call | |
| Box Spread Vs Short Box | Covered Call Vs Short Box | |
| Box Spread Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Box Spread Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Box Spread Vs Short Call | Covered Call Vs Box Spread | |
| Box Spread Vs Short Strangle | Covered Call Vs Short Strangle | |
| Box Spread Vs Long Strangle | Covered Call Vs Long Strangle | |
| Box Spread Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Box Spread Vs Long Straddle | Covered Call Vs Long Straddle | |
| Box Spread Vs Short Straddle | Covered Call Vs Short Straddle | |
| Box Spread Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Box Spread Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Box Spread Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Box Spread Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Box Spread Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Box Spread Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Box Spread option strategies.
At the same time, if you are in a neutral market situation and are looking for consistent but limited profits for your share market trades, then you can opt to go for the Box spread strategy.
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.
In case you are looking to trade in options segment or share market in general, let us assist you in that. Just fill the form below and we will take you to the steps ahead.
