Compare Strategies
BEAR PUT SPREAD | BULL CALL SPREAD | |
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About Strategy |
Bear Put Spread Option StrategyWhen 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 |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
BEAR PUT SPREAD Vs BULL CALL SPREAD - Details
BEAR PUT SPREAD | BULL CALL SPREAD | |
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Market View | Bearish | Bullish |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Long Put - Net Premium | Strike price of purchased call + net premium paid |
BEAR PUT SPREAD Vs BULL CALL SPREAD - When & How to use ?
BEAR PUT SPREAD | BULL CALL SPREAD | |
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Market View | Bearish | Bullish |
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. | This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. |
Action | Buy ITM Put Option, Sell OTM Put Option | Buy ITM Call Option, Sell OTM Call Option |
Breakeven Point | Strike Price of Long Put - Net Premium | Strike price of purchased call + net premium paid |
BEAR PUT SPREAD Vs BULL CALL SPREAD - Risk & Reward
BEAR PUT SPREAD | BULL CALL SPREAD | |
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Maximum Profit Scenario | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid. | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid |
Maximum Loss Scenario | Max Loss = Net Premium Paid. | Net Premium Paid |
Risk | Limited | Limited |
Reward | Limited | Limited |
BEAR PUT SPREAD Vs BULL CALL SPREAD - Strategy Pros & Cons
BEAR PUT SPREAD | BULL CALL SPREAD | |
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Similar Strategies | Bear Call Spread, Bull Call Spread | Collar |
Disadvantage | • Limited profit. • Early assignment risk. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
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. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |