Compare Strategies
LONG PUT | STRIP | |
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About Strategy |
Long Put Option StrategyThis strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. |
Strip Option StrategyStrip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the .. |
LONG PUT Vs STRIP - Details
LONG PUT | STRIP | |
---|---|---|
Market View | Bearish | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 1 | 3 |
Strategy Level | Beginners | Beginners |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Long Put - Premium Paid | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
LONG PUT Vs STRIP - When & How to use ?
LONG PUT | STRIP | |
---|---|---|
Market View | Bearish | Neutral |
When to use? | A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. | When a trader is bearish on the market and bullish on volatility then he will implement this strategy. |
Action | Buy Put Option | Buy 1 ATM Call, Buy 2 ATM Puts |
Breakeven Point | Strike Price of Long Put - Premium Paid | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
LONG PUT Vs STRIP - Risk & Reward
LONG PUT | STRIP | |
---|---|---|
Maximum Profit Scenario | Profit = Strike Price of Long Put - Premium Paid | Price of Underlying - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - Price of Underlying) - Net Premium Paid |
Maximum Loss Scenario | Max Loss = Premium Paid + Commissions Paid | Net Premium Paid + Commissions Paid |
Risk | Limited | Limited |
Reward | Unlimited | Unlimited |
LONG PUT Vs STRIP - Strategy Pros & Cons
LONG PUT | STRIP | |
---|---|---|
Similar Strategies | Protective Call, Short Put | Strap, Short Put Ladder |
Disadvantage | • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. | Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position. |
Advantages | • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. | Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving. |