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 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 Put 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 Put Vs Synthetic Call comparison:
| Comparison Aspect | Covered Put | Synthetic 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 | 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 | 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. | Stay with the position |
| Market Position | Neutral or Slightly Bearish | Bullish |
| Strategy Level Suitable for | Experts | Beginners |
| Options Traded | Put | Put |
| Number of Positions | 2 | 2 (Underlying + Put) |
| Action Needed | Short on Underlying and Short Put | 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 | Futures Price + Premium Received | Underlying Price + Put Premium |
| Investor Intention | Let Options Expire Worthlessly | Save Transaction Costs, Stay Protected from downward market movement. |
| Investor Expectation | Prices of Assets Go Down Slightly | Prices of the Assets to Go Up |
| Strategy Summary | Steady Profits with Caution | Profitable |
| Advantages | Income Generation, Reduced Losses | Dividends on Stocks, Limited Risk, Unlimited Profit |
| Disadvantages | Unlimited Risk in specific situations | Chances of loss if the underlying goes down |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Married Put | NA |
| More Comparisons | Covered Put Vs Short Put | Synthetic Call Vs Short Put |
| Covered Put Vs Long Combo | Synthetic Call Vs Long Combo | |
| Covered Put Vs Synthetic Call | Synthetic Call Vs Short Call | |
| Covered Put Vs Long Put | Synthetic Call Vs Long Put | |
| Covered Put Vs Long Call | Synthetic Call Vs Long Call | |
| Covered Put Vs Covered Call | Synthetic Call Vs Covered Call | |
| Covered Put Vs Short Call | Synthetic Call Vs Covered Put | |
| Covered Put Vs Protective Call | Synthetic Call Vs Protective Call | |
| Covered Put Vs Short Box | Synthetic Call Vs Short Box | |
| Covered Put Vs Long Call Condor | Synthetic Call Vs Long Call Condor | |
| Covered Put Vs Short Call Condor | Synthetic Call Vs Short Call Condor | |
| Covered Put Vs Box Spread | Synthetic Call Vs Box Spread | |
| Covered Put Vs Short Strangle | Synthetic Call Vs Short Strangle | |
| Covered Put Vs Long Strangle | Synthetic Call Vs Long Strangle | |
| Covered Put Vs Collar Strategy | Synthetic Call Vs Collar Strategy | |
| Covered Put Vs Long Straddle | Synthetic Call Vs Long Straddle | |
| Covered Put Vs Short Straddle | Synthetic Call Vs Short Straddle | |
| Covered Put Vs Long Call Butterfly | Synthetic Call Vs Long Call Butterfly | |
| Covered Put Vs Short Call Butterfly | Synthetic Call Vs Short Call Butterfly | |
| Covered Put Vs Bear Call Spread | Synthetic Call Vs Bear Call Spread | |
| Covered Put Vs Bear Put Spread | Synthetic Call Vs Bear Put Spread | |
| Covered Put Vs Bull Call Spread | Synthetic Call Vs Bull Call Spread | |
| Covered Put Vs Bull Put Spread | Synthetic Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Covered Put 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.
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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