Comparision (SHORT STRADDLE
VS BULL CALENDER SPREAD )
Compare Strategies
SHORT STRADDLE
BULL CALENDER SPREAD
About Strategy
Short Straddle Option strategy
This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an
This strategy is implemented when a trader is bullish on the underlying stock/index in the short term say 2 months or so. A trader will write one Near Month OTM Call Option and buy one next Month OTM Call Option, thereby reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when a trader wants to make prof ..
Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium
Stock Price when long call value is equal to net debit.
SHORT STRADDLE Vs BULL CALENDER SPREAD - Risk & Reward
SHORT STRADDLE
BULL CALENDER SPREAD
Maximum Profit Scenario
Max Profit = Net Premium Received - Commissions Paid
You have unlimited profit potential to the upside.
Maximum Loss Scenario
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Max Loss = Premium Paid + Commissions Paid
Risk
Unlimited
Limited
Reward
Limited
Unlimited
SHORT STRADDLE Vs BULL CALENDER SPREAD - Strategy Pros & Cons
SHORT STRADDLE
BULL CALENDER SPREAD
Similar Strategies
Short Strangle
The Collar, Bull Put Spread
Disadvantage
• Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
• Limited profit even if underlying asset rallies. • If the short call options are assigned when the underlying asset rallies then losses can be sustained.
Advantages
• A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .
• Limited losses to the net debit. • Enable trader to book profit even if underlying asset stays stagnant. • If the market trends reverse, cashing in from stock price movement at limited risk.