Compare Strategies
| DIAGONAL BEAR PUT SPREAD | STRIP | |
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| About Strategy |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
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 .. |
DIAGONAL BEAR PUT SPREAD Vs STRIP - Details
| DIAGONAL BEAR PUT SPREAD | STRIP | |
|---|---|---|
| Market View | Bearish | Neutral |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) + PE (Put Option) |
| Number Of Positions | 2 | 3 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
DIAGONAL BEAR PUT SPREAD Vs STRIP - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | STRIP | |
|---|---|---|
| Market View | Bearish | Neutral |
| When to use? | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset | When a trader is bearish on the market and bullish on volatility then he will implement this strategy. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buy 1 ATM Call, Buy 2 ATM Puts |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
DIAGONAL BEAR PUT SPREAD Vs STRIP - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | STRIP | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | 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 | When the stock trades up above the long-term put strike price. | Net Premium Paid + Commissions Paid |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
DIAGONAL BEAR PUT SPREAD Vs STRIP - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | STRIP | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Strap, Short Put Ladder |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position. |
| Advantages | The Risk is limited. | Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving. |