Covered Put (Married Put) Vs Long Call Butterfly Options Trading Strategy Comparison

Compare Covered Put (Married Put) and Long Call Butterfly options trading strategies. Find similarities and differences between Covered Put (Married Put) and Long Call Butterfly strategies. Find the best options trading strategy for your trading needs.

Covered Put (Married Put) Vs Long Call Butterfly

	Covered Put (Married Put)	Long Call Butterfly


About Strategy	The Covered Put is a neutral to bearish market view and expects the price of the underlying to remain range bound or go down. In this strategy, while shorting shares (or futures), you also sell a Put Option (ATM or slight OTM) to cover for any unexpected rise in the price of the shares. This strategy is also known as Married Put strategy or writing covered put strategy. The risk is unlimited while the reward is limited in this strategy. How to use a Protective Call trading strategy? The usual Covered Put looks like as below for State Bank of India (SBI) Shares which are currently traded at Rs 275 (SBI Spot Price): Covered Put Orders - SBI Stock OrdersSBI Strike Price Sell Underlying SharesSell 100 SBI Shares ... Read More	Long Call Butterfly is a neutral strategy where very low volatility in the price of underlying is expected. The strategy is a combination of bull Spread and bear Spread. It involves Buy 1 ITM Call, Sell 2 ATM Calls and Buy 1 OTM Call. The strike prices of all Options should be at equal distance from the current price. Suppose Nifty is currently trading at 10400. You expect very little volatility in it. You can implement the Long Call Butterfly by buying 1 ITM Call Option at 10300, selling 2 ATM Nifty Call Options at 10400, buying 1 OTM Call Option at 10500. Ensure that strike prices of Options are at equidistance. Your loss will be limited to the net premium paid on 4 positions while profit will be limited to strike price of short calls.... Read More
Market View	Bearish	Neutral
Strategy Level	Advance	Advance
Options Type	Put + Underlying	Call
Number of Positions	2	4
Risk Profile	Unlimited	Limited
Reward Profile	Limited	Limited
Breakeven Point	Futures Price + Premium Received

When and how to use Covered Put (Married Put) and Long Call Butterfly?

	Covered Put (Married Put)	Long Call Butterfly
When to use?	The Covered Put works well when the market is moderately Bearish	This strategy should be used when you're expecting no volatility in the price of the underlying.
Market View	Bearish When you are expecting a moderate drop in the price and volatility of the underlying.	Neutral Neutral on the underlying asset and bearish on the volatility.
Action	Sell Underlying Sell OTM Put Option Suppose SBI is trading at 300. You believe that the price will remain range bound or mildly drop. The covered put allows you to benefit from this market view. In this strategy, you sell the underlying and also sell a Put Option of the underlying and receive the premium. You will benefit from drop in prices of SBI, the Put Option will minimize your risks. If there is no change in price then you keep the premium received as profit.	Sell 2 ATM Call Buy 1 ITM Call Buy 1 OTM Call
Breakeven Point	Futures Price + Premium Received The break-even point is achieved when the price of the underlying is equal to the total of the sale price of underlying and premium received.	Upper Breakeven = Higher Strike Price - Net Premium Lower Breakeven = Lower Strike Price + Net Premium

Compare Risks and Rewards (Covered Put (Married Put) Vs Long Call Butterfly)

	Covered Put (Married Put)	Long Call Butterfly
Risks	Unlimited The Maximum Loss is Unlimited as the price of the underlying can theoretically go up to any extent. Loss = Price of Underlying - Sale Price of Underlying - Premium Received	Limited Risk in the Long Call Butterfly options strategy is limited to the net premium paid.
Rewards	Limited The maximum profit is limited to the premiums received. The profit happens when the price of the underlying moves above strike price of Short Put.	Limited Rewards in the Long Call Butterfly options strategy is limited to the adjacent strikes minus net premium debit.
Maximum Profit Scenario	Underlying goes down and Options exercised	Only ITM Call exercised
Maximum Loss Scenario	Underlying goes up and Options exercised	All options exercised or all options not exercised.

Pros & Cons or Covered Put (Married Put) and Long Call Butterfly

	Covered Put (Married Put)	Long Call Butterfly
Advantages	Its an income generation strategy in a neutral or Bearish market. Also allows you to benefit from fall in prices, range bound movements or mild increase.	Profit earning strategy with limited risk in a less volatile market.
Disadvantage	The risks can be huge if the prices increases steeply.	Premiums and brokerage paid on multiple position may eat your profits.
Simillar Strategies	Bear Put Spread, Bear Call Spread

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