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Comparision (DIAGONAL BULL CALL SPREAD VS BULL CALL SPREAD)

 

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  DIAGONAL BULL CALL SPREAD BULL CALL 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.

Bull Call Spread Option Strategy

Bull 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. ..

DIAGONAL BULL CALL SPREAD Vs BULL CALL SPREAD - Details

DIAGONAL BULL CALL SPREAD BULL CALL SPREAD
Market View Bullish Bullish
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 2 2
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Limited Limited
Breakeven Point Strike price of purchased call + net premium paid

DIAGONAL BULL CALL SPREAD Vs BULL CALL SPREAD - When & How to use ?

DIAGONAL BULL CALL SPREAD BULL CALL SPREAD
Market View Bullish Bullish
When to use? This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future.
Action Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call Buy ITM Call Option, Sell OTM Call Option
Breakeven Point Strike price of purchased call + net premium paid

DIAGONAL BULL CALL SPREAD Vs BULL CALL SPREAD - Risk & Reward

DIAGONAL BULL CALL SPREAD BULL CALL SPREAD
Maximum Profit Scenario (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid
Maximum Loss Scenario Net Premium Paid
Risk Limited Limited
Reward Limited Limited

DIAGONAL BULL CALL SPREAD Vs BULL CALL SPREAD - Strategy Pros & Cons

DIAGONAL BULL CALL SPREAD BULL CALL SPREAD
Similar Strategies Bull Put Spread Collar
Disadvantage • 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 • 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.

DIAGONAL BULL CALL SPREAD

BULL CALL SPREAD