Compare Strategies
| STOCK REPAIR | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
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| About Strategy |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has |
Neutral Calendar Spread Option strategyThis strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option, hence reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when the trader wants to make money from the .. |
STOCK REPAIR Vs NEUTRAL CALENDAR SPREAD - Details
| STOCK REPAIR | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Market View | Bullish | Neutral |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | - |
STOCK REPAIR Vs NEUTRAL CALENDAR SPREAD - When & How to use ?
| STOCK REPAIR | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Market View | Bullish | Neutral |
| When to use? | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. | This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Sell 1 Near-Term ATM Call, Buy 1 Long-Term ATM Call |
| Breakeven Point | - |
STOCK REPAIR Vs NEUTRAL CALENDAR SPREAD - Risk & Reward
| STOCK REPAIR | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Maximum Profit Scenario | Maximum Profit Limited When underlying stock price remains unchanged on expiration of the near month options. | |
| Maximum Loss Scenario | It occurs when the stock price goes down and stays down until expiration of the longer term options. | |
| Risk | Limited | Limited |
| Reward | Unlimited | Limited |
STOCK REPAIR Vs NEUTRAL CALENDAR SPREAD - Strategy Pros & Cons
| STOCK REPAIR | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Similar Strategies | Long Put Butterfly, Iron Butterfly | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Lower profitability • Must have enough experience. |
| Advantages | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. | • Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position. |