Comparision (DIAGONAL BULL CALL SPREAD
VS RATIO CALL WRITE)
Compare Strategies
DIAGONAL BULL CALL SPREAD
RATIO CALL WRITE
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.
This strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. ..
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Details
DIAGONAL BULL CALL SPREAD
RATIO CALL WRITE
Market View
Bullish
Neutral
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
Unlimited
Breakeven Point
Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - When & How to use ?
DIAGONAL BULL CALL SPREAD
RATIO CALL WRITE
Market View
Bullish
Neutral
When to use?
This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Risk & Reward
DIAGONAL BULL CALL SPREAD
RATIO CALL WRITE
Maximum Profit Scenario
Net Premium Received - Commissions Paid
Maximum Loss Scenario
Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid
Risk
Limited
Unlimited
Reward
Limited
Limited
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD
RATIO CALL WRITE
Similar Strategies
Bull Put Spread
Variable Ratio Write
Disadvantage
• Potential loss is higher than gain. • Limited profit.