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 Put Vs Bear Call 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 Put Vs Bear Call 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 Put Vs Bear Call Spread comparison:
| Comparison Aspect | Bear Call Spread | Covered Put |
| View |  |  |
| Strategy Introduction | The bear call spread consists of two calls, both with the same underlying asset and expiration date, but the strike price of the call options bought is less than the strike price of the same number of call options sold. Like most of the spread strategies, it is a limited-risk...more | 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 |
| Investor Obligation | As a thumb rule, the expiration date must be about 30-45 days away in order to be able to take advantage of the accelerating time decay. | 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. |
| Market Position | Moderately Bearish | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Put |
| Number of Positions | 2 | 2 |
| Action Needed | Buy OTM Call, Sell OTM Call | Short on Underlying and Short Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price of Short Call + Net Premium Received | Futures Price + Premium Received |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Market to go down gradually, but moderately | Prices of Assets Go Down Slightly |
| Strategy Summary | Limited Risk Limited Profit | Steady Profits with Caution |
| Advantages | Profit when Market is going down, Limited Risk | Income Generation, Reduced Losses |
| Disadvantages | Limited Profit | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Bear Call Spread Vs Short Put | Covered Put Vs Short Put |
| Bear Call Spread Vs Long Combo | Covered Put Vs Long Combo | |
| Bear Call Spread Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Bear Call Spread Vs Long Put | Covered Put Vs Long Put | |
| Bear Call Spread Vs Long Call | Covered Put Vs Long Call | |
| Bear Call Spread Vs Covered Call | Covered Put Vs Covered Call | |
| Bear Call Spread Vs Covered Put | Covered Put Vs Short Call | |
| Bear Call Spread Vs Protective Call | Covered Put Vs Protective Call | |
| Bear Call Spread Vs Short Box | Covered Put Vs Short Box | |
| Bear Call Spread Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Bear Call Spread Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Bear Call Spread Vs Box Spread | Covered Put Vs Box Spread | |
| Bear Call Spread Vs Short Strangle | Covered Put Vs Short Strangle | |
| Bear Call Spread Vs Long Strangle | Covered Put Vs Long Strangle | |
| Bear Call Spread Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Bear Call Spread Vs Long Straddle | Covered Put Vs Long Straddle | |
| Bear Call Spread Vs Short Straddle | Covered Put Vs Short Straddle | |
| Bear Call Spread Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Bear Call Spread Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Bear Call Spread Vs Short Call | Covered Put Vs Bear Call Spread | |
| Bear Call Spread Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Bear Call Spread Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Bear Call Spread Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Covered Put Vs Bear Call Spread option strategies.
As the name suggests, if you are looking at a slightly bearish market position and are open for a little risk, then bear call spread is something you can try in your trades. Having said that, the profit you can expect is going to be on a relatively limited level while using this strategy.
This needs to be known that the profit you get using this strategy is also limited in scope.
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.
Furthermore, as told above, it also depends on the market situation.
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