Comparision (DIAGONAL BULL CALL SPREAD
VS BEAR PUT SPREAD)
Compare Strategies
DIAGONAL BULL CALL SPREAD
BEAR PUT SPREAD
About Strategy
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.
When a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM ..
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Details
DIAGONAL BULL CALL SPREAD
BEAR PUT SPREAD
Market View
Bullish
Bearish
Type (CE/PE)
CE (Call Option)
PE (Put Option)
Number Of Positions
2
2
Strategy Level
Beginners
Advance
Reward Profile
Limited
Limited
Risk Profile
Limited
Limited
Breakeven Point
Strike Price of Long Put - Net Premium
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - When & How to use ?
DIAGONAL BULL CALL SPREAD
BEAR PUT SPREAD
Market View
Bullish
Bearish
When to use?
The bear call spread options 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.
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Risk & Reward
DIAGONAL BULL CALL SPREAD
BEAR PUT SPREAD
Maximum Profit Scenario
Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid.
Maximum Loss Scenario
Max Loss = Net Premium Paid.
Risk
Limited
Limited
Reward
Limited
Limited
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD
BEAR PUT SPREAD
Similar Strategies
Bull Put Spread
Bear Call Spread, Bull Call Spread
Disadvantage
• Limited profit. • Early assignment risk.
Advantages
• If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk.