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Comparision (BULL PUT SPREAD VS SHORT PUT)

 

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  BULL PUT SPREAD SHORT PUT
About Strategy

Bull Put Spread Option Strategy

Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

BULL PUT SPREAD Vs SHORT PUT - Details

BULL PUT SPREAD SHORT PUT
Market View Bullish Bullish
Type (CE/PE) PE (Put Option) PE (Put Option)
Number Of Positions 2 1
Strategy Level Advance Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike price of short put - net premium paid Strike Price - Premium

BULL PUT SPREAD Vs SHORT PUT - When & How to use ?

BULL PUT SPREAD SHORT PUT
Market View Bullish Bullish
When to use? Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Buy OTM Put Option, Sell ITM Put Option Sell Put Option
Breakeven Point Strike price of short put - net premium paid Strike Price - Premium

BULL PUT SPREAD Vs SHORT PUT - Risk & Reward

BULL PUT SPREAD SHORT PUT
Maximum Profit Scenario Max Profit = Net Premium Received Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received Unlimited (When the price of the underlying falls.)
Risk Limited Unlimited
Reward Limited Limited

BULL PUT SPREAD Vs SHORT PUT - Strategy Pros & Cons

BULL PUT SPREAD SHORT PUT
Similar Strategies Bull Call Spread, Bear Put Spread, Collar Bull Put Spread, Short Starddle
Disadvantage • Limited profit potential. • In loss situations, time decay may go against you. • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

BULL PUT SPREAD

SHORT PUT