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 Covered Put 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 Covered Put 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 Covered Put comparison:
| Comparison Aspect | Covered Put | Covered Call |
| View |  |  |
| Strategy Introduction | Covered Put is the options trading strategy which involves shorting the underlying asset, along with selling a put option on the same number of shares. By doing this, the trader is able to...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 price of the stock goes below the strike price of the put option, the put option will be expired and will have to be brought back. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Neutral or Slightly Bearish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Experts | Beginners |
| Options Traded | Put | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | Short on Underlying and Short Put | Sell Call Option |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Futures Price + Premium Received | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Prices of Assets Go Down Slightly | Limited Price Movements |
| Strategy Summary | Steady Profits with Caution | Cautious |
| Advantages | Income Generation, Reduced Losses | Generates Steady Income |
| Disadvantages | Unlimited Risk in specific situations | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Married Put | NA |
| More Comparisons | Covered Put Vs Short Put | Covered Call Vs Short Put |
| Covered Put Vs Long Combo | Covered Call Vs Long Combo | |
| Covered Put Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Covered Put Vs Long Put | Covered Call Vs Short Call | |
| Covered Put Vs Long Call | Covered Call Vs Long Call | |
| Covered Put Vs Covered Call | Covered Call Vs Long Put | |
| Covered Put Vs Short Call | Covered Call Vs Covered Put | |
| Covered Put Vs Protective Call | Covered Call Vs Protective Call | |
| Covered Put Vs Short Box | Covered Call Vs Short Box | |
| Covered Put Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Covered Put Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Covered Put Vs Box Spread | Covered Call Vs Box Spread | |
| Covered Put Vs Short Strangle | Covered Call Vs Short Strangle | |
| Covered Put Vs Long Strangle | Covered Call Vs Long Strangle | |
| Covered Put Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Covered Put Vs Long Straddle | Covered Call Vs Long Straddle | |
| Covered Put Vs Short Straddle | Covered Call Vs Short Straddle | |
| Covered Put Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Covered Put Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Covered Put Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Covered Put Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Covered Put Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Covered Put Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Covered Put option strategies.
At the same time, if you are looking at a bearish market momentum and are open towards high risk with consistent but limited profits, then Covered Put is suitable for your trading style.
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.
