Compare Strategies
| STOCK REPAIR | LONG COMBO | |
|---|---|---|
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| About Strategy |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has |
Long Combo Option StrategyLong Combo Option Trading Strategy is implemented when a trader is bullish in nature and expects the stock price to rise in the near future. Here a trader will sell one ‘Out of the Money’ Put Option and buy one ‘Out of the Money’ Call Option. This trade will require less capital to implement since the amount required to buy the call will be covered by the amount received .. |
STOCK REPAIR Vs LONG COMBO - Details
| STOCK REPAIR | LONG COMBO | |
|---|---|---|
| Market View | Bullish | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Unlimited |
| Breakeven Point | Call Strike + Net Premium |
STOCK REPAIR Vs LONG COMBO - When & How to use ?
| STOCK REPAIR | LONG COMBO | |
|---|---|---|
| Market View | Bullish | Bullish |
| When to use? | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. | This strategy is used when an investor Bullish on an underlying but don't have the required capital or the risk appetite to invest directly into it. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Sell OTM Put Option, Buy OTM Call Option |
| Breakeven Point | Call Strike + Net Premium |
STOCK REPAIR Vs LONG COMBO - Risk & Reward
| STOCK REPAIR | LONG COMBO | |
|---|---|---|
| Maximum Profit Scenario | Underlying asset goes up and Call option exercised | |
| Maximum Loss Scenario | Underlying asset goes down and Put option exercised | |
| Risk | Limited | Unlimited |
| Reward | Unlimited | Unlimited |
STOCK REPAIR Vs LONG COMBO - Strategy Pros & Cons
| STOCK REPAIR | LONG COMBO | |
|---|---|---|
| Similar Strategies | - | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Losses can keep on increasing as the price of stock goes down. • High risk strategy. |
| Advantages | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. | • Capital investment is low and returns are high. • Unlimited reward, returns keep on increasing with the increase on stock price. • Leverage facility provided by this strategy is very beneficial. |