Compare Strategies
BEAR CALL SPREAD | BULL CALL SPREAD | |
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About Strategy |
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 Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
BEAR CALL SPREAD Vs BULL CALL SPREAD - Details
BEAR CALL SPREAD | BULL CALL SPREAD | |
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Market View | Bearish | Bullish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Short Call + Net Premium Received | Strike price of purchased call + net premium paid |
BEAR CALL SPREAD Vs BULL CALL SPREAD - When & How to use ?
BEAR CALL SPREAD | BULL CALL SPREAD | |
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Market View | Bearish | Bullish |
When to use? | 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. | This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. |
Action | Buy OTM Call Option, Sell ITM Call Option | Buy ITM Call Option, Sell OTM Call Option |
Breakeven Point | Strike Price of Short Call + Net Premium Received | Strike price of purchased call + net premium paid |
BEAR CALL SPREAD Vs BULL CALL SPREAD - Risk & Reward
BEAR CALL SPREAD | BULL CALL SPREAD | |
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Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | Net Premium Paid |
Risk | Limited | Limited |
Reward | Limited | Limited |
BEAR CALL SPREAD Vs BULL CALL SPREAD - Strategy Pros & Cons
BEAR CALL SPREAD | BULL CALL SPREAD | |
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Similar Strategies | Bear Put Spread, Bull Call Spread | Collar |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
Advantages | • 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. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |