Compare Strategies
LONG GUTS | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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About Strategy |
Long Guts Option StrategyThis strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. This strategy involves buying 1 ITM Call Option and 1 ITM Put Option. This strategy can be called as Debit Spread because trader’s account is debited at the time of entering the positions.< |
Christmas Tree Spread with Puts Option StrategyThis Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one put at strike price D, skipping strike price C, writes three calls at strike price B, and buying two calls at strike price A for same expiration dates for neutral to bearish forecast. An investor used this strategy to potential returns .. |
LONG GUTS Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Details
LONG GUTS | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 6 |
Strategy Level | Beginners | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | Lowest strike prices + the half premium – premium paid |
LONG GUTS Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - When & How to use ?
LONG GUTS | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
When to use? | This strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. | This Strategy is used when an investor wants potential returns. |
Action | Buy 1 ITM Call, Buy 1 ITM Put | Buying one ATM, Selling 3 Puts, Buying one more OTM Put |
Breakeven Point | Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | Lowest strike prices + the half premium – premium paid |
LONG GUTS Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Risk & Reward
LONG GUTS | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Maximum Profit Scenario | Price of Underlying - Strike Price of Long Call - Net Premium Paid OR Strike Price of Long Put - Price of Underlying - Premium Paid | Equal middle strike price – higher strike price – the premium |
Maximum Loss Scenario | Net Premium Paid + Strike Price of Long Put - Strike Price of Long Call + Commissions Paid | Net Debit paid for the strategy. |
Risk | Limited | Limited |
Reward | Unlimited | Limited |
LONG GUTS Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Strategy Pros & Cons
LONG GUTS | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Similar Strategies | Short Put Ladder, Strip, Strap | Butterfly spreads |
Disadvantage | • More commission involved than simply buying call or put option. • Expensive. | • Potential profit is lower or limited. |
Advantages | • Investors can get unlimited profit if the underlying asset goes up or down. • Ability to profit no matter if the market goes in either direction. • Limited loss. | • The potential of loss is limited. |