Covered Call vs Short Put
At the same strike and expiry, a covered call (holding the underlying and selling a call) and a short put have the same payoff at expiry: limited upside, the full downside below the strike. That's put-call parity. What differs is how each is held.
Last reviewed:
Side by side, live
| Covered Call | Short Put (Naked Put) | |
|---|---|---|
| Net Cost? | $84445.38 | -$1944.52 |
| Max Profit? | $2554.62 | $1944.52 |
| Max Loss? | -$84445.38 | -$84055.48 |
| Breakeven(s)? | $84445.38 | $84055.48 |
| Prob. of Profit? | 59% | 63% |
| Delta? | 0.6018 | 0.5183 |
| Theta? | 88.1206 | 90.3920 |
| Vega? | -55.2410 | -57.0504 |
Both built on the same venue, asset and expiry, at execution prices with fees, exactly as each strategy's own page shows them; open either one to change strikes or width.
The difference
- Legs: the covered call is two positions, the underlying and the sold call; the short put is one option, so it trades once and pays one fee.
- Capital: the covered call ties up the whole underlying; the short put ties up margin or the cash to buy at the strike.
- Prices: the call and the put at the same strike sit in different parts of the book, with different bids, asks and depth, so the two can cost slightly different amounts to open, as the side-by-side above shows.
When each one fits
A holder who already owns the coin and is willing to sell it at the strike writes covered calls: income on a position already held. Someone who doesn't own it yet and would buy at the strike sells puts: income while waiting to buy lower. The risk is the same: the price falling far below the strike.
What to watch
Neither protects against a crash: the premium only cushions the first part of a fall. Compare the maximum loss above with what you would be comfortable holding, and the premium with the upside you give away above the strike.
Educational content, not investment advice. See the disclaimer.