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 Bull 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 Bull 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 Bull Put Spread comparison:
| Comparison Aspect | Bull Put Spread | Covered Call |
| View |  |  |
| Strategy Introduction | Bull Put Spread comes into play when the trader is expecting the market is going up gradually, but moderately. So, this is also suitable for a moderately bullish forecast, just like the bull call option...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 | Bull put spread is more ideal if the there is very high volatility in the market, time to expiration date is more and the market has declined considerably. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Moderately Bullish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Put | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | Buy OTM Put, Sell ITM Put | Sell Call Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike price of short put MINUS net premium paid | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Market Prices to Go Up | Limited Price Movements |
| Strategy Summary | Limited Risk, Limited Gains | Cautious |
| Advantages | Limited Risk | Generates Steady Income |
| Disadvantages | Limited Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 3 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | NA |
| More Comparisons | Bull Put Spread Vs Short Put | Covered Call Vs Short Put |
| Bull Put Spread Vs Long Combo | Covered Call Vs Long Combo | |
| Bull Put Spread Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Bull Put Spread Vs Long Put | Covered Call Vs Short Call | |
| Bull Put Spread Vs Long Call | Covered Call Vs Long Call | |
| Bull Put Spread Vs Covered Call | Covered Call Vs Long Put | |
| Bull Put Spread Vs Covered Put | Covered Call Vs Covered Put | |
| Bull Put Spread Vs Protective Call | Covered Call Vs Protective Call | |
| Bull Put Spread Vs Short Box | Covered Call Vs Short Box | |
| Bull Put Spread Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Bull Put Spread Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Bull Put Spread Vs Box Spread | Covered Call Vs Box Spread | |
| Bull Put Spread Vs Short Strangle | Covered Call Vs Short Strangle | |
| Bull Put Spread Vs Long Strangle | Covered Call Vs Long Strangle | |
| Bull Put Spread Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Bull Put Spread Vs Long Straddle | Covered Call Vs Long Straddle | |
| Bull Put Spread Vs Short Straddle | Covered Call Vs Short Straddle | |
| Bull Put Spread Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Bull Put Spread Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Bull Put Spread Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Bull Put Spread Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Bull Put Spread Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Bull Put Spread Vs Short Call | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Bull Put Spread option strategies.
At the same time, if you are in a moderately bullish forecast situation and want to take a limited risk, then Bull Put Spread is one of the options trading strategies you can look out for.
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.
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.
