Compare Strategies
| DIAGONAL BEAR PUT SPREAD | LONG CALL | |
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| About Strategy |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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DIAGONAL BEAR PUT SPREAD Vs LONG CALL - Details
| DIAGONAL BEAR PUT SPREAD | LONG CALL | |
|---|---|---|
| Market View | Bearish | Bullish |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 1 |
| Strategy Level | Beginners | Beginner Level |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike Price + Premium |
DIAGONAL BEAR PUT SPREAD Vs LONG CALL - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | LONG CALL | |
|---|---|---|
| Market View | Bearish | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) |
| When to use? | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset | This strategy work when an investor expect the underlying instrument move in upward direction. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buying Call option |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike price + Premium |
DIAGONAL BEAR PUT SPREAD Vs LONG CALL - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | LONG CALL | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Underlying Asset close above from the strike price on expiry. |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Premium Paid |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
DIAGONAL BEAR PUT SPREAD Vs LONG CALL - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | LONG CALL | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Protective Put |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. |
| Advantages | The Risk is limited. | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. |