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Comparision (SHORT STRADDLE VS DIAGONAL BULL CALL SPREAD)

 

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  SHORT STRADDLE DIAGONAL BULL CALL SPREAD
About Strategy

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an

Diagonal Bull Call Spread Option Strategy

This strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option.

SHORT STRADDLE Vs DIAGONAL BULL CALL SPREAD - Details

SHORT STRADDLE DIAGONAL BULL CALL SPREAD
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option)
Number Of Positions 2 2
Strategy Level Advance Beginners
Reward Profile Limited Limited
Risk Profile Unlimited Limited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT STRADDLE Vs DIAGONAL BULL CALL SPREAD - When & How to use ?

SHORT STRADDLE DIAGONAL BULL CALL SPREAD
Market View Neutral Bullish
When to use? This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Sell Call Option, Sell Put Option Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT STRADDLE Vs DIAGONAL BULL CALL SPREAD - Risk & Reward

SHORT STRADDLE DIAGONAL BULL CALL SPREAD
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Unlimited Limited
Reward Limited Limited

SHORT STRADDLE Vs DIAGONAL BULL CALL SPREAD - Strategy Pros & Cons

SHORT STRADDLE DIAGONAL BULL CALL SPREAD
Similar Strategies Short Strangle Bull Put Spread
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

SHORT STRADDLE

DIAGONAL BULL CALL SPREAD