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 Put 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 Put 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 Put comparison:
| Comparison Aspect | Long Call | Covered Put |
| 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 | 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 | 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. | 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 | Bullish | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Put |
| Number of Positions | 1 | 2 |
| Action Needed | Buy Call Option | Short on Underlying and Short Put |
| Risk for You | Limited to Premium | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price PLUS Premium | Futures Price + Premium Received |
| Investor Intention | Exercise Option if Profitable, Let it go otherwise | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Up Sharply | Prices of Assets Go Down Slightly |
| Strategy Summary | Attractive | Steady Profits with Caution |
| Advantages | Unlimited Profits, Limited Loss, Low Investment | Income Generation, Reduced Losses |
| Disadvantages | Premium may eat up the Profits | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Long Call Vs Long Put | Covered Put Vs Short Put |
| Long Call Vs Long Combo | Covered Put Vs Long Combo | |
| Long Call Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Long Call Vs Short Call | Covered Put Vs Long Put | |
| Long Call Vs Short Put | Covered Put Vs Long Call | |
| Long Call Vs Covered Call | Covered Put Vs Covered Call | |
| Long Call Vs Covered Put | Covered Put Vs Short Call | |
| Long Call Vs Protective Call | Covered Put Vs Protective Call | |
| Long Call Vs Short Box | Covered Put Vs Short Box | |
| Long Call Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Long Call Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Long Call Vs Box Spread | Covered Put Vs Box Spread | |
| Long Call Vs Short Strangle | Covered Put Vs Short Strangle | |
| Long Call Vs Long Strangle | Covered Put Vs Long Strangle | |
| Long Call Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Long Call Vs Long Straddle | Covered Put Vs Long Straddle | |
| Long Call Vs Short Straddle | Covered Put Vs Short Straddle | |
| Long Call Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Long Call Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Long Call Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Long Call Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Long Call Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Long Call Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Call Vs Covered Put 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.
At the same time, 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.
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