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 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 Put 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 Put Vs Covered Put comparison:
| Comparison Aspect | Long Put | Covered Put |
| 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 | 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 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. | 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 | Bearish | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Put |
| Number of Positions | 1 | 2 |
| Action Needed | Buy Put Option | Short on Underlying and Short Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Futures Price + Premium Received |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down | Prices of Assets Go Down Slightly |
| Strategy Summary | Effective | Steady Profits with Caution |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Income Generation, Reduced Losses |
| Disadvantages | High Premium | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Long Put Vs Short Put | Covered Put Vs Short Put |
| Long Put Vs Long Combo | Covered Put Vs Long Combo | |
| Long Put Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Long Put Vs Short Call | Covered Put Vs Long Put | |
| Long Put Vs Long Call | Covered Put Vs Long Call | |
| Long Put Vs Covered Call | Covered Put Vs Covered Call | |
| Long Put Vs Covered Put | Covered Put Vs Short Call | |
| Long Put Vs Protective Call | Covered Put Vs Protective Call | |
| Long Put Vs Short Box | Covered Put Vs Short Box | |
| Long Put Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Long Put Vs Box Spread | Covered Put Vs Box Spread | |
| Long Put Vs Short Strangle | Covered Put Vs Short Strangle | |
| Long Put Vs Long Strangle | Covered Put Vs Long Strangle | |
| Long Put Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Long Put Vs Long Straddle | Covered Put Vs Long Straddle | |
| Long Put Vs Short Straddle | Covered Put Vs Short Straddle | |
| Long Put Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Long Put Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Long Put Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Put Vs Covered Put 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 the Long Put Option Strategy. 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.
Furthermore, as said above, it also depends on the market situation.
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