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 Synthetic Call 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 Synthetic Call 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 Synthetic Call comparison:
| Comparison Aspect | Covered Call | Synthetic Call |
| View |  |  |
| Strategy Introduction | 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 | Synthetic Call is an options strategy in which an underlying asset is combined with a put option to protect against depreciation in the value of the underlying asset. The overall effect is similar to...more |
| Investor Obligation | Pay the difference as a loss in case the stock value falls beyond the investor set price. | Stay with the position |
| Market Position | Moderately Bullish or Neutral | Bullish |
| Strategy Level Suitable for | Beginners | Beginners |
| Options Traded | Call | Put |
| Number of Positions | 2 (Underlying & Call) | 2 (Underlying + Put) |
| Action Needed | Sell Call Option | Holds a long position in an underlying asset and a put option on the same stock |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Underlying Price + Put Premium |
| Investor Intention | Make Money from Premium Received | Save Transaction Costs, Stay Protected from downward market movement. |
| Investor Expectation | Limited Price Movements | Prices of the Assets to Go Up |
| Strategy Summary | Cautious | Profitable |
| Advantages | Generates Steady Income | Dividends on Stocks, Limited Risk, Unlimited Profit |
| Disadvantages | Limited Profit, Unlimited Risk | Chances of loss if the underlying goes down |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Covered Call Vs Short Put | Synthetic Call Vs Short Put |
| Covered Call Vs Long Combo | Synthetic Call Vs Long Combo | |
| Covered Call Vs Synthetic Call | Synthetic Call Vs Short Call | |
| Covered Call Vs Short Call | Synthetic Call Vs Long Put | |
| Covered Call Vs Long Call | Synthetic Call Vs Long Call | |
| Covered Call Vs Long Put | Synthetic Call Vs Covered Call | |
| Covered Call Vs Covered Put | Synthetic Call Vs Covered Put | |
| Covered Call Vs Protective Call | Synthetic Call Vs Protective Call | |
| Covered Call Vs Short Box | Synthetic Call Vs Short Box | |
| Covered Call Vs Long Call Condor | Synthetic Call Vs Long Call Condor | |
| Covered Call Vs Short Call Condor | Synthetic Call Vs Short Call Condor | |
| Covered Call Vs Box Spread | Synthetic Call Vs Box Spread | |
| Covered Call Vs Short Strangle | Synthetic Call Vs Short Strangle | |
| Covered Call Vs Long Strangle | Synthetic Call Vs Long Strangle | |
| Covered Call Vs Collar Strategy | Synthetic Call Vs Collar Strategy | |
| Covered Call Vs Long Straddle | Synthetic Call Vs Long Straddle | |
| Covered Call Vs Short Straddle | Synthetic Call Vs Short Straddle | |
| Covered Call Vs Long Call Butterfly | Synthetic Call Vs Long Call Butterfly | |
| Covered Call Vs Short Call Butterfly | Synthetic Call Vs Short Call Butterfly | |
| Covered Call Vs Bear Call Spread | Synthetic Call Vs Bear Call Spread | |
| Covered Call Vs Bear Put Spread | Synthetic Call Vs Bear Put Spread | |
| Covered Call Vs Bull Put Spread | Synthetic Call Vs Bull Call Spread | |
| Covered Call Vs Bull Put Spread | Synthetic Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Synthetic Call option strategies.
At the same time, if you are looking at a bearish market momentum and are open towards a limited risk with a potential of unlimited profits, then Synthetic Call options strategy is definitely a positive go for you.
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.
