Compare Strategies
SHORT PUT | BULL PUT SPREAD | |
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About Strategy |
Short Put Option StrategyA trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level. Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put. |
Bull Put Spread Option StrategyBull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem .. |
SHORT PUT Vs BULL PUT SPREAD - Details
SHORT PUT | BULL PUT SPREAD | |
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Market View | Bullish | Bullish |
Type (CE/PE) | PE (Put Option) | PE (Put Option) |
Number Of Positions | 1 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Strike Price - Premium | Strike price of short put - net premium paid |
SHORT PUT Vs BULL PUT SPREAD - When & How to use ?
SHORT PUT | BULL PUT SPREAD | |
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Market View | Bullish | Bullish |
When to use? | This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. | Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. |
Action | Sell Put Option | Buy OTM Put Option, Sell ITM Put Option |
Breakeven Point | Strike Price - Premium | Strike price of short put - net premium paid |
SHORT PUT Vs BULL PUT SPREAD - Risk & Reward
SHORT PUT | BULL PUT SPREAD | |
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Maximum Profit Scenario | Premium received in your account when you sell the Put Option. | Max Profit = Net Premium Received |
Maximum Loss Scenario | Unlimited (When the price of the underlying falls.) | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
SHORT PUT Vs BULL PUT SPREAD - Strategy Pros & Cons
SHORT PUT | BULL PUT SPREAD | |
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Similar Strategies | Bull Put Spread, Short Starddle | Bull Call Spread, Bear Put Spread, Collar |
Disadvantage | • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. | • Limited profit potential. • In loss situations, time decay may go against you. |
Advantages | • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account. | • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. |