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 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 Short 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 Short Call Vs Covered Put comparison:
| Comparison Aspect | Short Call | Covered Put |
| View |  |  |
| Strategy Introduction | Short Call is used when the trader expects that the price of the underlying asset will go down sharply, he shorts a call. If the price of the asset goes down, the strategy generates profit. However, if the price...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 obligation to buy the stock at the predetermined price at the time of expiration. | 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 | Experts | Experts |
| Options Traded | Call | Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Call Option | Short on Underlying and Short Put |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price PLUS Premium | Futures Price + Premium Received |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down Sharply | Prices of Assets Go Down Slightly |
| Strategy Summary | Risky | Steady Profits with Caution |
| Advantages | Profits in Bearish Market | Income Generation, Reduced Losses |
| Disadvantages | Limited Profit, Unlimited Risk | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | Married Put |
| More Comparisons | Short Call Vs Short Put | Covered Put Vs Short Put |
| Short Call Vs Long Combo | Covered Put Vs Long Combo | |
| Short Call Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Short Call Vs Long Put | Covered Put Vs Long Put | |
| Short Call Vs Long Call | Covered Put Vs Long Call | |
| Short Call Vs Covered Call | Covered Put Vs Covered Call | |
| Short Call Vs Covered Put | Covered Put Vs Short Call | |
| Short Call Vs Protective Call | Covered Put Vs Protective Call | |
| Short Call Vs Short Box | Covered Put Vs Short Box | |
| Short Call Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Short Call Vs Box Spread | Covered Put Vs Box Spread | |
| Short Call Vs Short Strangle | Covered Put Vs Short Strangle | |
| Short Call Vs Long Strangle | Covered Put Vs Long Strangle | |
| Short Call Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Short Call Vs Long Straddle | Covered Put Vs Long Straddle | |
| Short Call Vs Short Straddle | Covered Put Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Short Call Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Covered Put option strategies.
As mentioned above, if you are looking to put minimal initial investment and have a high-risk appetite, then Short Call options strategy can work wonders for you.
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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