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 Short Box 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 Short Box 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 Short Box Vs Covered Put comparison:
| Comparison Aspect | Short Box | Covered Put |
| View |  |  |
| Strategy Introduction | Short Box involves selling a bull call spread along with a bear put spread, both at the same strike prices and expiration date, so that both the spreads balance each other out and create an arbitrage...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 | Recognize Put Call Parity distrubance as soon as possible and take positions to capture the movement. | 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 | Neutral | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | 1 Short ITM Call, 1 Long OTM Call, 1 Short ITM Put, 1 Long OTM Put | Put |
| Number of Positions | 4 | 2 |
| Action Needed | Sell bull call spread along with a Bear put spread | Short on Underlying and Short Put |
| Risk for You | None | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Not Required, Almost No Risk/Loss | Futures Price + Premium Received |
| Investor Intention | Take Positions at the right time and capture the profit. | Let Options Expire Worthlessly |
| Investor Expectation | Profits generated from the strategy will be enough to compensate for the commissions and brokerages paid | Prices of Assets Go Down Slightly |
| Strategy Summary | Complicated | Steady Profits with Caution |
| Advantages | No Capital Needed, Zero Risk | Income Generation, Reduced Losses |
| Disadvantages | Low Profit | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 3 | 2 |
| Market Scenarios - Loss | 0 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Short Box Vs Short Put | Covered Put Vs Short Put |
| Short Box Vs Long Combo | Covered Put Vs Long Combo | |
| Short Box Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Short Box Vs Long Put | Covered Put Vs Long Put | |
| Short Box Vs Long Call | Covered Put Vs Long Call | |
| Short Box Vs Covered Call | Covered Put Vs Covered Call | |
| Short Box Vs Covered Put | Covered Put Vs Short Call | |
| Short Box Vs Protective Call | Covered Put Vs Protective Call | |
| Short Box Vs Short Call | Covered Put Vs Short Box | |
| Short Box Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Short Box Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Short Box Vs Box Spread | Covered Put Vs Box Spread | |
| Short Box Vs Short Strangle | Covered Put Vs Short Strangle | |
| Short Box Vs Long Strangle | Covered Put Vs Long Strangle | |
| Short Box Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Short Box Vs Long Straddle | Covered Put Vs Long Straddle | |
| Short Box Vs Short Straddle | Covered Put Vs Short Straddle | |
| Short Box Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Short Box Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Short Box Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Short Box Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Short Box Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Short Box Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Short Box Vs Covered Put option strategies.
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.
Remember, the Short box strategy has no risk but provides a consistent (and limited) profits to your trades. To add to that, it is a relatively complex strategy too.
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.
