Compare Strategies
BULL PUT SPREAD | BEAR CALL SPREAD | |
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About Strategy |
Bull Put Spread Option StrategyBull 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 |
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 .. |
BULL PUT SPREAD Vs BEAR CALL SPREAD - Details
BULL PUT SPREAD | BEAR CALL SPREAD | |
---|---|---|
Market View | Bullish | Bearish |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike price of short put - net premium paid | Strike Price of Short Call + Net Premium Received |
BULL PUT SPREAD Vs BEAR CALL SPREAD - When & How to use ?
BULL PUT SPREAD | BEAR CALL SPREAD | |
---|---|---|
Market View | Bullish | Bearish |
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 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 | Buy OTM Put Option, Sell ITM Put Option | Buy OTM Call Option, Sell ITM Call Option |
Breakeven Point | Strike price of short put - net premium paid | Strike Price of Short Call + Net Premium Received |
BULL PUT SPREAD Vs BEAR CALL SPREAD - Risk & Reward
BULL PUT SPREAD | BEAR CALL SPREAD | |
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Maximum Profit Scenario | Max Profit = Net Premium Received | Max Profit = Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received |
Risk | Limited | Limited |
Reward | Limited | Limited |
BULL PUT SPREAD Vs BEAR CALL SPREAD - Strategy Pros & Cons
BULL PUT SPREAD | BEAR CALL SPREAD | |
---|---|---|
Similar Strategies | Bull Call Spread, Bear Put Spread, Collar | Bear Put Spread, Bull Call Spread |
Disadvantage | • Limited profit potential. • In loss situations, time decay may go against you. | • Limited amount of profit. • Margin requirement, more commission charges. |
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. | • 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. |