Compare Strategies
| BULL PUT SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
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| About Strategy |
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 |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
BULL PUT SPREAD Vs DIAGONAL BEAR PUT SPREAD - Details
| BULL PUT SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| Type (CE/PE) | PE (Put Option) | PE (Put Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike price of short put - net premium paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL PUT SPREAD Vs DIAGONAL BEAR PUT SPREAD - When & How to use ?
| BULL PUT SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| When to use? | 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. | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset |
| Action | Buy OTM Put Option, Sell ITM Put Option | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option |
| Breakeven Point | Strike price of short put - net premium paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL PUT SPREAD Vs DIAGONAL BEAR PUT SPREAD - Risk & Reward
| BULL PUT SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Maximum Profit Scenario | Max Profit = Net Premium Received | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month |
| Maximum Loss Scenario | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received | When the stock trades up above the long-term put strike price. |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
BULL PUT SPREAD Vs DIAGONAL BEAR PUT SPREAD - Strategy Pros & Cons
| BULL PUT SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Similar Strategies | Bull Call Spread, Bear Put Spread, Collar | Bear Put Spread and Bear Call Spread |
| Disadvantage | • Limited profit potential. • In loss situations, time decay may go against you. | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. |
| Advantages | • 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. | The Risk is limited. |