Compare Strategies
| DIAGONAL BEAR PUT SPREAD | BEAR CALL 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. |
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 .. |
DIAGONAL BEAR PUT SPREAD Vs BEAR CALL SPREAD - Details
| DIAGONAL BEAR PUT SPREAD | BEAR CALL SPREAD | |
|---|---|---|
| Market View | Bearish | Bearish |
| 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. | Strike Price of Short Call + Net Premium Received |
DIAGONAL BEAR PUT SPREAD Vs BEAR CALL SPREAD - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | BEAR CALL SPREAD | |
|---|---|---|
| Market View | Bearish | Bearish |
| 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 used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buy OTM Call Option, Sell ITM Call Option |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike Price of Short Call + Net Premium Received |
DIAGONAL BEAR PUT SPREAD Vs BEAR CALL SPREAD - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | BEAR CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Max Profit = Net Premium Received - Commissions Paid |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
DIAGONAL BEAR PUT SPREAD Vs BEAR CALL SPREAD - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | BEAR CALL SPREAD | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Bear Put Spread, Bull Call Spread |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • Limited amount of profit. • Margin requirement, more commission charges. |
| Advantages | The Risk is limited. | • 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. |