Comparision (BEAR CALL SPREAD
VS CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY)
Compare Strategies
BEAR CALL SPREAD
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
About Strategy
Bear Call Spread Option Strategy
Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r
This Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one call at strike price A, skipping strike price B, writes three calls at strike price C, and buying two calls at strike price D for same expiration dates for neutral to bullish forecast. An investor used this strategy to potential retur ..
BEAR CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Details
BEAR CALL SPREAD
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Market View
Bearish
Bullish
Type (CE/PE)
CE (Call Option)
CE (Call Option)
Number Of Positions
2
4
Strategy Level
Beginners
Advance
Reward Profile
Limited
Limited
Risk Profile
Limited
Limited
Breakeven Point
Strike Price of Short Call + Net Premium Received
Lowest strike prices + premium paid – the half premium.
BEAR CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - When & How to use ?
BEAR CALL SPREAD
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Market View
Bearish
Bullish
When to use?
This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
This Strategy is used when an investor wants potential returns.
Action
Buy OTM Call Option, Sell ITM Call Option
• Buy 1 call , • Sell 3 calls, • Buy 2 calls
Breakeven Point
Strike Price of Short Call + Net Premium Received
Lowest strike prices + premium paid – the half premium.
BEAR CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Risk & Reward
BEAR CALL SPREAD
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Maximum Profit Scenario
Max Profit = Net Premium Received - Commissions Paid
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Net Debit paid for the strategy.
Risk
Limited
Limited
Reward
Limited
Limited
BEAR CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Strategy Pros & Cons
BEAR CALL SPREAD
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Similar Strategies
Bear Put Spread, Bull Call Spread
CHRISTMAS TREE SPREAD WITH PUT OPTION
Disadvantage
• Limited amount of profit. • Margin requirement, more commission charges.
• Potential profit is lower or limited.
Advantages
• This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk.