Which one is better Covered put or Selling naked call !!

mmca2006

Active Member
#1
One question came to my mind which strategy is better at any point of time , Covered put OR Selling naked ATM call. I toggled both strategies with option oracle but did not find to much difference between two regarding Max. profit, BEP etc. So why people prefer covered strategy . I believe that I am missing some valuable points for which people prefer covered strategy.Regarding covered put , I want to mean Selling Future ( not share) and selling ATM Put. My purpose to gain some insight regarding above strategy specially covered put,when should I go for covered put than to sell a call . Hope members of this forum will provide their valuable views and will get a healthy discussion. :)
I am just giving an example of nifty
1) Strategy 1--Covered put -sold I lot nifty future @5944 , sold one lot 5900 put @ 134, max profit--8700, upper protection--6074 , If nifty tomorrow goes above 6210 ( my SL) , loss will be 9500/-.

2) Strategy 2--Selling naked call 5900 @ 178 , MAx profit--8900 , upper protection 6080 , If nifty tomorrow goes above 6210( my SL) , loss will be 9900/-.
so result in both cases more or less same.Now should I prefer one over another is so why OR I can opt any one!!:confused:
 
Last edited:
#2
One question came to my mind which strategy is better at any point of time , Covered put OR Selling naked ATM call. I toggled both strategies with option oracle but did not find to much difference between two regarding Max. profit, BEP etc. So why people prefer covered strategy . I believe that I am missing some valuable points for which people prefer covered strategy.Regarding covered put , I want to mean Selling Future ( not share) and selling ATM Put. My purpose to gain some insight regarding above strategy specially covered put,when should I go for covered put than to sell a call . Hope members of this forum will provide their valuable views and will get a healthy discussion. :)
I am just giving an example of nifty
1) Strategy 1--Covered put -sold I lot nifty future @5944 , sold one lot 5900 put @ 134, max profit--8700, upper protection--6074 , If nifty tomorrow goes above 6210 ( my SL) , loss will be 9500/-.

2) Strategy 2--Selling naked call 5900 @ 178 , MAx profit--8900 , upper protection 6080 , If nifty tomorrow goes above 6210( my SL) , loss will be 9900/-.
so result in both cases more or less same.Now should I prefer one over another is so why OR I can opt any one!!:confused:
I am new to options..but my opinion is that we should go for nifty long and short OTM call ( ex: if nifty fut at 5940 , buy at this level and short 6200 ce),
if market goes down unexpectedly, we should book profit in CE and buy nifty at 5740 (min 200 to 250 points) means averaging..(so at 5840) and again short another OTM Call.. but for this type strategy lumpsum amount required..i hope this works
 

mmca2006

Active Member
#3
I am new to options..but my opinion is that we should go for nifty long and short OTM call ( ex: if nifty fut at 5940 , buy at this level and short 6200 ce),
if market goes down unexpectedly, we should book profit in CE and buy nifty at 5740 (min 200 to 250 points) means averaging..(so at 5840) and again short another OTM Call.. but for this type strategy lumpsum amount required..i hope this works
thanks for your view , can you explain why should I buy nifty and short call, why not simply sell put and save my brokerage? In both case profit/loss is more or less same.:)
 

smartcat

Active Member
#4
If you intend to hold till expiration, go for selling naked call option. You will save on brokerage.

If you intend to "manage your position", go for covered put option because it gives you extra flexibility. For eg: If Nifty is falling, and you "feel" that it will continue to fall, then you could square off the put option, and just hold the short future position.
 
#5
covered call , naked put/call and 18 strategies available fot option trading but all of them not work in single mode..
so u need to find which one work for which time frame?
need more ping me..

happy trading...
 

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