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 Short 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 Covered Call Vs Short 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 Covered Call Vs Short Call comparison:
| Comparison Aspect | Short Call | Covered Call |
| 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 | 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 trader has the obligation to buy the stock at the predetermined price at the time of expiration. | 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 | Experts | Beginners |
| Options Traded | Call | Call |
| Number of Positions | 1 | 2 (Underlying & Call) |
| Action Needed | Sell Call Option | Sell Call Option |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price PLUS Premium | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Make Money from Premium Received |
| Investor Expectation | Prices of Assets Go Down Sharply | Limited Price Movements |
| Strategy Summary | Risky | Cautious |
| Advantages | Profits in Bearish Market | Generates Steady Income |
| Disadvantages | Limited Profit, Unlimited Risk | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Covered Call Vs Short Put |
| Short Call Vs Long Combo | Covered Call Vs Long Combo | |
| Short Call Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Short Call Vs Long Put | Covered Call Vs Short Call | |
| Short Call Vs Long Call | Covered Call Vs Long Call | |
| Short Call Vs Covered Call | Covered Call Vs Long Put | |
| Short Call Vs Covered Put | Covered Call Vs Covered Put | |
| Short Call Vs Protective Call | Covered Call Vs Protective Call | |
| Short Call Vs Short Box | Covered Call Vs Short Box | |
| Short Call Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Short Call Vs Box Spread | Covered Call Vs Box Spread | |
| Short Call Vs Short Strangle | Covered Call Vs Short Strangle | |
| Short Call Vs Long Strangle | Covered Call Vs Long Strangle | |
| Short Call Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Short Call Vs Long Straddle | Covered Call Vs Long Straddle | |
| Short Call Vs Short Straddle | Covered Call Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Short Call Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Short Call option strategies.
However, 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.
At the same time, 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.
