Comparision (BEAR CALL SPREAD
VS REVERSE IRON BUTTERFLY)
Compare Strategies
BEAR CALL SPREAD
REVERSE IRON BUTTERFLY
About Strategy
Bear Call Spread Option Strategy
Bear 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
Reverse Iron Butterfly as the name suggests is the opposite of Iron Butterfly. In Reverse Iron Butterfly, a trader is bullish on volatility and expects the market to make significant move in the near future in either directions. Here a trader will buy 1 ATM Call Option, sell 1 OTM Call Option, buy 1 ATM Put Option, sell 1 OTM Put Option. This strategy also bags lim ..
BEAR CALL SPREAD Vs REVERSE IRON BUTTERFLY - Details
BEAR CALL SPREAD
REVERSE IRON BUTTERFLY
Market View
Bearish
Neutral
Type (CE/PE)
CE (Call Option)
CE (Call Option) + PE (Put Option)
Number Of Positions
2
4
Strategy Level
Beginners
Advance
Reward Profile
Limited
Limited
Risk Profile
Limited
Limited
Breakeven Point
Strike Price of Short Call + Net Premium Received
Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid
BEAR CALL SPREAD Vs REVERSE IRON BUTTERFLY - When & How to use ?
BEAR CALL SPREAD
REVERSE IRON BUTTERFLY
Market View
Bearish
Neutral
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.
This strategy is used when a trader is bullish on volatility and expects the market to make significant move in the near future in either directions.
Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid
BEAR CALL SPREAD Vs REVERSE IRON BUTTERFLY - Risk & Reward
BEAR CALL SPREAD
REVERSE IRON BUTTERFLY
Maximum Profit Scenario
Max Profit = Net Premium Received - Commissions Paid
Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid
Maximum Loss Scenario
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Net Premium Paid + Commissions Paid
Risk
Limited
Limited
Reward
Limited
Limited
BEAR CALL SPREAD Vs REVERSE IRON BUTTERFLY - Strategy Pros & Cons
BEAR CALL SPREAD
REVERSE IRON BUTTERFLY
Similar Strategies
Bear Put Spread, Bull Call Spread
Short Put Butterfly, Short Condor
Disadvantage
• Limited amount of profit. • Margin requirement, more commission charges.
• Potential loss is higher than gain, complex strategy. • Not suitable for beginners.
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.
• Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits, volatile strategy.