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 Put 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 Put 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 Put Vs Covered Call comparison:
| Comparison Aspect | Long Put | Covered Call |
| View |  |  |
| Strategy Introduction | Long Put is used when the trader has a bearish view on the market and expects the price of the asset to go down. He will then wait for the prices to go down and then exercise his option...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 strategy gives the trader a right to buy the put option on expiry, but not the obligation. The trader may choose to buy the option or not. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Bearish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Beginners | Beginners |
| Options Traded | Put | Call |
| Number of Positions | 1 | 2 (Underlying & Call) |
| Action Needed | Buy Put Option | Sell Call Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Prices of Assets Go Down | Limited Price Movements |
| Strategy Summary | Effective | Cautious |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Generates Steady Income |
| Disadvantages | High Premium | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Put Vs Short Put | Covered Call Vs Short Put |
| Long Put Vs Long Combo | Covered Call Vs Long Combo | |
| Long Put Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Long Put Vs Short Call | Covered Call Vs Short Call | |
| Long Put Vs Long Call | Covered Call Vs Long Call | |
| Long Put Vs Covered Call | Covered Call Vs Long Put | |
| Long Put Vs Covered Put | Covered Call Vs Covered Put | |
| Long Put Vs Protective Call | Covered Call Vs Protective Call | |
| Long Put Vs Short Box | Covered Call Vs Short Box | |
| Long Put Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Long Put Vs Box Spread | Covered Call Vs Box Spread | |
| Long Put Vs Short Strangle | Covered Call Vs Short Strangle | |
| Long Put Vs Long Strangle | Covered Call Vs Long Strangle | |
| Long Put Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Long Put Vs Long Straddle | Covered Call Vs Long Straddle | |
| Long Put Vs Short Straddle | Covered Call Vs Short Straddle | |
| Long Put Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Long Put Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Long Put Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Put Vs Covered Call option strategies.
As mentioned above, if you are a beginner level trader and are looking for unlimited profits with limited risk – it makes sense for you to employ a Long Put Option Strategy. 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 said above, it also depends on the market situation.
In case you are looking to trade in options segment or share market in general, let us assist you in that. Just fill the form below and we will take you to the steps ahead.
