RISK REVERSAL	STRAP
About Strategy	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod Read more..	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin .. Read more..

RISK REVERSAL Vs STRAP - Details

	RISK REVERSAL	STRAP
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	3
Strategy Level	Advance	Beginners
Reward Profile	Unlimited	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid
Risk Profile	Unlimited	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts
Breakeven Point	Premium received - Put Strike Price	Strike Price of Calls/Puts + (Net Premium Paid/2)

RISK REVERSAL Vs STRAP - When & How to use ?

	RISK REVERSAL	STRAP
Market View	Bullish	Neutral
When to use?	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	Buy 2 ATM Call Option, Buy 1 ATM Put Option
Breakeven Point	Premium received - Put Strike Price	Strike Price of Calls/Puts + (Net Premium Paid/2)

RISK REVERSAL Vs STRAP - Risk & Reward

	RISK REVERSAL	STRAP
Maximum Profit Scenario	You have unlimited profit potential to the upside.	UNLIMITED
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Net Premium Paid
Risk	Unlimited	Limited
Reward	Unlimited	Unlimited

RISK REVERSAL Vs STRAP - Strategy Pros & Cons

	RISK REVERSAL	STRAP
Similar Strategies	-	Strip, Short Put Ladder, Short Call Ladder
Disadvantage	Unlimited Risk.	• To generate profit, there should be significant change in share price. • Expensive strategy.
Advantages	Unlimited profit.	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.