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Comparision (LONG PUT VS LONG CALL)

 

Compare Strategies

  LONG PUT LONG CALL
About Strategy

Long Put Option Strategy

This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future.
Risk: The maximum loss will be the premium amount paid.<

Long Call Option Strategy

This is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.

LONG PUT Vs LONG CALL - Details

LONG PUT LONG CALL
Market View Bearish Bullish
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 1 1
Strategy Level Beginners Beginner Level
Reward Profile Unlimited Unlimited
Risk Profile Limited Limited
Breakeven Point Strike Price of Long Put - Premium Paid Strike Price + Premium

LONG PUT Vs LONG CALL - When & How to use ?

LONG PUT LONG CALL
Market View Bearish Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.)
When to use? A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. This strategy work when an investor expect the underlying instrument move in upward direction.
Action Buy Put Option Buying Call option
Breakeven Point Strike Price of Long Put - Premium Paid Strike price + Premium

LONG PUT Vs LONG CALL - Risk & Reward

LONG PUT LONG CALL
Maximum Profit Scenario Profit = Strike Price of Long Put - Premium Paid Underlying Asset close above from the strike price on expiry.
Maximum Loss Scenario Max Loss = Premium Paid + Commissions Paid Premium Paid
Risk Limited Limited
Reward Unlimited Unlimited

LONG PUT Vs LONG CALL - Strategy Pros & Cons

LONG PUT LONG CALL
Similar Strategies Protective Call, Short Put Protective Put
Disadvantage • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen.
Advantages • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock.

LONG PUT

LONG CALL