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Comparision (BULL PUT SPREAD VS RATIO CALL WRITE)

 

Compare Strategies

  BULL PUT SPREAD RATIO CALL WRITE
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

Ratio Call Write Option Strategy 

This strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited.

BULL PUT SPREAD Vs RATIO CALL WRITE - Details

BULL PUT SPREAD RATIO CALL WRITE
Market View Bullish Neutral
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 Unlimited
Breakeven Point Strike price of short put - net premium paid Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

BULL PUT SPREAD Vs RATIO CALL WRITE - When & How to use ?

BULL PUT SPREAD RATIO CALL WRITE
Market View Bullish Neutral
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 by a trader who is neutral on the market and bearish on the volatility in the near future.
Action Buy OTM Put Option, Sell ITM Put Option Sell 2 ATM Calls
Breakeven Point Strike price of short put - net premium paid Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

BULL PUT SPREAD Vs RATIO CALL WRITE - Risk & Reward

BULL PUT SPREAD RATIO CALL WRITE
Maximum Profit Scenario Max Profit = Net Premium Received Net Premium Received - Commissions Paid
Maximum Loss Scenario Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid
Risk Limited Unlimited
Reward Limited Limited

BULL PUT SPREAD Vs RATIO CALL WRITE - Strategy Pros & Cons

BULL PUT SPREAD RATIO CALL WRITE
Similar Strategies Bull Call Spread, Bear Put Spread, Collar Variable Ratio Write
Disadvantage • Limited profit potential. • In loss situations, time decay may go against you. • Potential loss is higher than gain. • Limited profit.
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.

BULL PUT SPREAD

RATIO CALL WRITE