What Is the Risk-Reward Profile of a Protective Put versus a Covered Call? ▴ Learn

What Is the Risk-Reward Profile of a Protective Put versus a Covered Call?

A Protective Put has a risk-reward profile of limited loss and unlimited profit potential, minus the premium cost. It acts as insurance, protecting the downside while retaining full upside.

A Covered Call has a risk-reward profile of limited loss and limited profit. It generates income but caps the upside profit at the Call's strike price.

The Protective Put is for bearish-to-bullish outlooks, while the Covered Call is for neutral-to-moderately bullish outlooks.

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