Compare Strategies
| DIAGONAL BEAR PUT SPREAD | NEUTRAL CALENDAR SPREAD | |
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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. |
Neutral Calendar Spread Option strategyThis strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option, hence reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when the trader wants to make money from the .. |
DIAGONAL BEAR PUT SPREAD Vs NEUTRAL CALENDAR SPREAD - Details
| DIAGONAL BEAR PUT SPREAD | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Market View | Bearish | Neutral |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Limited |
| 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. | - |
DIAGONAL BEAR PUT SPREAD Vs NEUTRAL CALENDAR SPREAD - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| 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 | This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Sell 1 Near-Term ATM Call, Buy 1 Long-Term ATM Call |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | - |
DIAGONAL BEAR PUT SPREAD Vs NEUTRAL CALENDAR SPREAD - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Maximum Profit Limited When underlying stock price remains unchanged on expiration of the near month options. |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | It occurs when the stock price goes down and stays down until expiration of the longer term options. |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
DIAGONAL BEAR PUT SPREAD Vs NEUTRAL CALENDAR SPREAD - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | NEUTRAL CALENDAR SPREAD | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Long Put Butterfly, Iron Butterfly |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • Lower profitability • Must have enough experience. |
| Advantages | The Risk is limited. | • Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position. |