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 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 Put Vs Bear 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 Put Vs Bear Put Spread comparison:
| Comparison Aspect | Bear Put Spread | Covered Put |
| View |  |  |
| Strategy Introduction | Bear Put Spread is a type of vertical spread wherein buys a put option hoping to make a profit due to the market decline, and at the same time writes another put option with...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 | If the prices fall as expected, the trader can make profits and limit his losses, but if the prices fall far more than expected then the trader won’t be able to make any profit. | 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 | Put | Put |
| Number of Positions | 2 | 2 |
| Action Needed | Buy ITM Put, Sell OTM Put | Short on Underlying and Short Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price of Long Put MINUS Net Premium | Futures Price + Premium Received |
| Investor Intention | Let Put Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Market Prices to go Down | Prices of Assets Go Down Slightly |
| Strategy Summary | Limit Your Losses | Steady Profits with Caution |
| Advantages | Limited Risk, Capped Losses | Income Generation, Reduced Losses |
| Disadvantages | Limited Profit | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Bear Put Spread Vs Short Put | Covered Put Vs Short Put |
| Bear Put Spread Vs Long Combo | Covered Put Vs Long Combo | |
| Bear Put Spread Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Bear Put Spread Vs Long Put | Covered Put Vs Long Put | |
| Bear Put Spread Vs Long Call | Covered Put Vs Long Call | |
| Bear Put Spread Vs Covered Call | Covered Put Vs Covered Call | |
| Bear Put Spread Vs Covered Put | Covered Put Vs Short Call | |
| Bear Put Spread Vs Protective Call | Covered Put Vs Protective Call | |
| Bear Put Spread Vs Short Box | Covered Put Vs Short Box | |
| Bear Put Spread Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Bear Put Spread Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Bear Put Spread Vs Box Spread | Covered Put Vs Box Spread | |
| Bear Put Spread Vs Short Strangle | Covered Put Vs Short Strangle | |
| Bear Put Spread Vs Long Strangle | Covered Put Vs Long Strangle | |
| Bear Put Spread Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Bear Put Spread Vs Long Straddle | Covered Put Vs Long Straddle | |
| Bear Put Spread Vs Short Straddle | Covered Put Vs Short Straddle | |
| Bear Put Spread Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Bear Put Spread Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Bear Put Spread Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Bear Put Spread Vs Short Call | Covered Put Vs Bear Put Spread | |
| Bear Put Spread Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Bear Put Spread Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Covered Put Vs Bear Put Spread option strategies.
At the same time, if you are looking to make some money from a market decline and can take some basic risk – then Bear Put Spread options strategy makes sense to you.
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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