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Comparision (DIAGONAL BULL CALL SPREAD VS BEAR PUT SPREAD)

 

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  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.

Bear Put Spread Option Strategy 

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.
Action Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call Buy ITM Put Option, Sell OTM Put Option
Breakeven Point Strike Price of Long Put - Net Premium

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.

DIAGONAL BULL CALL SPREAD

BEAR PUT SPREAD