Compare Strategies
DIAGONAL BULL CALL SPREAD | SHORT PUT | |
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About Strategy |
Diagonal Bull Call Spread Option StrategyThis 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. Risk:
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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. |
DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Details
DIAGONAL BULL CALL SPREAD | SHORT PUT | |
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Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 1 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price - Premium |
DIAGONAL BULL CALL SPREAD Vs SHORT PUT - When & How to use ?
DIAGONAL BULL CALL SPREAD | SHORT PUT | |
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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. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Sell Put Option |
Breakeven Point | Strike Price - Premium |
DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Risk & Reward
DIAGONAL BULL CALL SPREAD | SHORT PUT | |
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Maximum Profit Scenario | Premium received in your account when you sell the Put Option. | |
Maximum Loss Scenario | Unlimited (When the price of the underlying falls.) | |
Risk | Limited | Unlimited |
Reward | Limited | Limited |
DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | SHORT PUT | |
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Similar Strategies | Bull Put Spread | Bull Put Spread, Short Starddle |
Disadvantage | • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. | |
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. |