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Comparision (BEAR CALL SPREAD VS RATIO PUT SPREAD)

 

Compare Strategies

  BEAR CALL SPREAD RATIO PUT SPREAD
About Strategy

Bear Call Spread Option Strategy 

Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r

Ratio Put Spread Option Strategy 

This strategy involves buying ITM Puts and simultaneously selling OTM Puts, double the number of ITM Puts. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited.

BEAR CALL SPREAD Vs RATIO PUT SPREAD - Details

BEAR CALL SPREAD RATIO PUT SPREAD
Market View Bearish Neutral
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 3
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Short Call + Net Premium Received Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

BEAR CALL SPREAD Vs RATIO PUT SPREAD - When & How to use ?

BEAR CALL SPREAD RATIO PUT SPREAD
Market View Bearish Neutral
When to use? This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action Buy OTM Call Option, Sell ITM Call Option Buy 1 ITM Put, Sell 2 OTM Puts
Breakeven Point Strike Price of Short Call + Net Premium Received Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts)

BEAR CALL SPREAD Vs RATIO PUT SPREAD - Risk & Reward

BEAR CALL SPREAD RATIO PUT SPREAD
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Strike Price of Long Put - Strike Price of Short Put + Net Premium Received - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Strike Price of Short - Price of Underlying - Max Profit + Commissions Paid
Risk Limited Unlimited
Reward Limited Limited

BEAR CALL SPREAD Vs RATIO PUT SPREAD - Strategy Pros & Cons

BEAR CALL SPREAD RATIO PUT SPREAD
Similar Strategies Bear Put Spread, Bull Call Spread Short Straddle (Sell Straddle), Short Strangle (Sell Strangle)
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges. • Unlimited potential risk. • Limited profit.
Advantages • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. • Directional strategy so that there is either no upside or downside risk. • Able to profit even if trader is neutral on the market. • Higher probability of profit.

BEAR CALL SPREAD

RATIO PUT SPREAD