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 Short Box 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 Short Box 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 Short Box comparison:
| Comparison Aspect | Short Box | Covered Call |
| View |  |  |
| Strategy Introduction | Short Box involves selling a bull call spread along with a bear put spread, both at the same strike prices and expiration date, so that both the spreads balance each other out and create an arbitrage...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 | Recognize Put Call Parity distrubance as soon as possible and take positions to capture the movement. | 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 | Experts | Beginners |
| Options Traded | 1 Short ITM Call, 1 Long OTM Call, 1 Short ITM Put, 1 Long OTM Put | Call |
| Number of Positions | 4 | 2 (Underlying & Call) |
| Action Needed | Sell bull call spread along with a Bear put spread | Sell Call Option |
| Risk for You | None | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Not Required, Almost No Risk/Loss | Strike Price MINUS Premium |
| Investor Intention | Take Positions at the right time and capture the profit. | Make Money from Premium Received |
| Investor Expectation | Profits generated from the strategy will be enough to compensate for the commissions and brokerages paid | Limited Price Movements |
| Strategy Summary | Complicated | Cautious |
| Advantages | No Capital Needed, Zero Risk | Generates Steady Income |
| Disadvantages | Low Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 3 | 2 |
| Market Scenarios - Loss | 0 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Box Vs Short Put | Covered Call Vs Short Put |
| Short Box Vs Long Combo | Covered Call Vs Long Combo | |
| Short Box Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Short Box Vs Long Put | Covered Call Vs Short Call | |
| Short Box Vs Long Call | Covered Call Vs Long Call | |
| Short Box Vs Covered Call | Covered Call Vs Long Put | |
| Short Box Vs Covered Put | Covered Call Vs Covered Put | |
| Short Box Vs Protective Call | Covered Call Vs Protective Call | |
| Short Box Vs Short Call | Covered Call Vs Short Box | |
| Short Box Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Short Box Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Short Box Vs Box Spread | Covered Call Vs Box Spread | |
| Short Box Vs Short Strangle | Covered Call Vs Short Strangle | |
| Short Box Vs Long Strangle | Covered Call Vs Long Strangle | |
| Short Box Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Short Box Vs Long Straddle | Covered Call Vs Long Straddle | |
| Short Box Vs Short Straddle | Covered Call Vs Short Straddle | |
| Short Box Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Short Box Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Short Box Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Short Box Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Short Box Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Short Box Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Short Box option strategies.
At the same time, if you are looking at a neutral market or there is not much happening in some of the sectors you are looking to invest in, then Short Box is one optimal option trading strategy for you.
Remember, the Short box strategy has no risk but provides a consistent (and limited) profits to your trades. To add to that, it is a relatively complex strategy too.
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.
