Compare Strategies
DIAGONAL BULL CALL SPREAD | BEAR PUT SPREAD | |
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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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Bear Put Spread Option StrategyWhen a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM .. |
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Details
DIAGONAL BULL CALL SPREAD | BEAR PUT SPREAD | |
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Market View | Bullish | Bearish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Long Put - Net Premium |
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - When & How to use ?
DIAGONAL BULL CALL SPREAD | BEAR PUT SPREAD | |
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Market View | Bullish | Bearish |
When to use? | The bear call spread options 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. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Buy ITM Put Option, Sell OTM Put Option |
Breakeven Point | Strike Price of Long Put - Net Premium |
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Risk & Reward
DIAGONAL BULL CALL SPREAD | BEAR PUT SPREAD | |
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Maximum Profit Scenario | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid. | |
Maximum Loss Scenario | Max Loss = Net Premium Paid. | |
Risk | Limited | Limited |
Reward | Limited | Limited |
DIAGONAL BULL CALL SPREAD Vs BEAR PUT SPREAD - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | BEAR PUT SPREAD | |
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Similar Strategies | Bull Put Spread | Bear Call Spread, Bull Call Spread |
Disadvantage | • Limited profit. • Early assignment risk. | |
Advantages | • If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk. |