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 Long Call Vs Covered 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 Long Call Vs Covered 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 Long Call Vs Covered Call comparison:
| Comparison Aspect | Long Call | Covered Call |
| View |  |  |
| Strategy Introduction | In Long Call Strategy, the trader enters into a contract to buy a call option when he is bullish towards the market. The trader anticipates that the price of the security will go up in the future. However, he does not want to take the risk of buying the security outright...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 | The trader has the right to buy a security at a future date at a predefined price. The term long itself means buying a security or buying an option. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Bullish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Call |
| Number of Positions | 1 | 2 (Underlying & Call) |
| Action Needed | Buy Call Option | Sell Call Option |
| Risk for You | Limited to Premium | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price PLUS Premium | Strike Price MINUS Premium |
| Investor Intention | Exercise Option if Profitable, Let it go otherwise | Make Money from Premium Received |
| Investor Expectation | Prices of Assets Go Up Sharply | Limited Price Movements |
| Strategy Summary | Attractive | Cautious |
| Advantages | Unlimited Profits, Limited Loss, Low Investment | Generates Steady Income |
| Disadvantages | Premium may eat up the Profits | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Call Vs Long Put | Covered Call Vs Short Put |
| Long Call Vs Long Combo | Covered Call Vs Long Combo | |
| Long Call Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Long Call Vs Short Call | Covered Call Vs Short Call | |
| Long Call Vs Short Put | Covered Call Vs Long Call | |
| Long Call Vs Covered Call | Covered Call Vs Long Put | |
| Long Call Vs Covered Put | Covered Call Vs Covered Put | |
| Long Call Vs Protective Call | Covered Call Vs Protective Call | |
| Long Call Vs Short Box | Covered Call Vs Short Box | |
| Long Call Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Long Call Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Long Call Vs Box Spread | Covered Call Vs Box Spread | |
| Long Call Vs Short Strangle | Covered Call Vs Short Strangle | |
| Long Call Vs Long Strangle | Covered Call Vs Long Strangle | |
| Long Call Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Long Call Vs Long Straddle | Covered Call Vs Long Straddle | |
| Long Call Vs Short Straddle | Covered Call Vs Short Straddle | |
| Long Call Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Long Call Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Long Call Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Long Call Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Long Call Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Long Call Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Call Vs Covered Call option strategies.
As mentioned above, if you are in a Bullish market situation and want to make unlimited profits on your trades, then Long Call is one of the options trading strategies you can opt for. The risk involved in this strategy is more than limited and thus, the strategy can only work for higher profits if you have the experience to run similar strategies in the past.
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.
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