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 Covered Call Vs Long Combo 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 Covered Call Vs Long Combo 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 Covered Call Vs Long Combo comparison:
| Comparison Aspect | Long Combo | Covered Call |
| View |  |  |
| Strategy Introduction | The long combo is used when the investor is bullish towards the market and is certain that the prices of the shares will go up...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 expects low initial investment, however, the trader needs to pay the premium on the trades irrespective of the trade result. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Bullish | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Put, Call | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | Sell One OTM Put, Buy One OTM Call | Sell Call Option |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Call Strike + Net Premium | Strike Price MINUS Premium |
| Investor Intention | Low Upfront Investments, High ROI | Make Money from Premium Received |
| Investor Expectation | Price of Stocks Go Up | Limited Price Movements |
| Strategy Summary | Complex | Cautious |
| Advantages | Low Upfront Investment, Unlimited Profits | Generates Steady Income |
| Disadvantages | Unlimited Loss, High Premium | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Combo Vs Short Put | Covered Call Vs Short Put |
| Long Combo Vs Long Put | Covered Call Vs Long Combo | |
| Long Combo Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Long Combo Vs Short Call | Covered Call Vs Short Call | |
| Long Combo Vs Long Call | Covered Call Vs Long Call | |
| Long Combo Vs Covered Call | Covered Call Vs Long Put | |
| Long Combo Vs Covered Put | Covered Call Vs Covered Put | |
| Long Combo Vs Protective Call | Covered Call Vs Protective Call | |
| Long Combo Vs Short Box | Covered Call Vs Short Box | |
| Long Combo Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Long Combo Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Long Combo Vs Box Spread | Covered Call Vs Box Spread | |
| Long Combo Vs Short Strangle | Covered Call Vs Short Strangle | |
| Long Combo Vs Long Strangle | Covered Call Vs Long Strangle | |
| Long Combo Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Long Combo Vs Long Straddle | Covered Call Vs Long Straddle | |
| Long Combo Vs Short Straddle | Covered Call Vs Short Straddle | |
| Long Combo Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Long Combo Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Long Combo Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Long Combo Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Long Combo Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Long Combo Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Long Combo option strategies.
If you are looking to put minimal initial investment and are open for unlimited profits as well as risks, then Long Combo options strategy can work wonders for you.
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 told 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.
