Compare Strategies
BEAR CALL SPREAD | BEAR PUT SPREAD | |
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About Strategy |
Bear Call Spread Option StrategyBear 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 |
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 .. |
BEAR CALL SPREAD Vs BEAR PUT SPREAD - Details
BEAR CALL SPREAD | BEAR PUT SPREAD | |
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Market View | Bearish | 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 Short Call + Net Premium Received | Strike Price of Long Put - Net Premium |
BEAR CALL SPREAD Vs BEAR PUT SPREAD - When & How to use ?
BEAR CALL SPREAD | BEAR PUT SPREAD | |
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Market View | Bearish | Bearish |
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. | 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 OTM Call Option, Sell ITM Call Option | Buy ITM Put Option, Sell OTM Put Option |
Breakeven Point | Strike Price of Short Call + Net Premium Received | Strike Price of Long Put - Net Premium |
BEAR CALL SPREAD Vs BEAR PUT SPREAD - Risk & Reward
BEAR CALL SPREAD | BEAR PUT SPREAD | |
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Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid. |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | Max Loss = Net Premium Paid. |
Risk | Limited | Limited |
Reward | Limited | Limited |
BEAR CALL SPREAD Vs BEAR PUT SPREAD - Strategy Pros & Cons
BEAR CALL SPREAD | BEAR PUT SPREAD | |
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Similar Strategies | Bear Put Spread, Bull Call Spread | Bear Call Spread, Bull Call Spread |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | • Limited profit. • Early assignment risk. |
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. | • 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. |