Comparision (DIAGONAL BEAR PUT SPREAD
VS MARRIED PUT )
Compare Strategies
DIAGONAL BEAR PUT SPREAD
MARRIED PUT
About Strategy
Diagonal Bear Put Spread
When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk.
This strategy is applied when trader goes long on the underlying asset i.e. he buys the stock in cash market. He has a bullish view and expects the market to rise in the near future, but simultaneously has the fear of downward movement of the markets. In order to cover his position from vulnerabilities he buys one ATM Put Option of the same underlying asset. Here, a trader wi ..
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Purchase Price of Underlying + Premium Paid
DIAGONAL BEAR PUT SPREAD Vs MARRIED PUT - When & How to use ?
DIAGONAL BEAR PUT SPREAD
MARRIED PUT
Market View
Bearish
Bullish
When to use?
When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset
This Strategy work when the investor goes long in any stock. He expects the rise in market in future.
Action
Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option
Buy 250 XYZ Shares, Buy 1 ATM Put Option
Breakeven Point
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Purchase Price of Underlying + Premium Paid
DIAGONAL BEAR PUT SPREAD Vs MARRIED PUT - Risk & Reward
DIAGONAL BEAR PUT SPREAD
MARRIED PUT
Maximum Profit Scenario
'Premiums received - Initial premium to execute + Strike price - Stock Price on final month
Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario
When the stock trades up above the long-term put strike price.
Max Loss = Premium Paid + Commissions Paid
Risk
Limited
Limited
Reward
Limited
Unlimited
DIAGONAL BEAR PUT SPREAD Vs MARRIED PUT - Strategy Pros & Cons
DIAGONAL BEAR PUT SPREAD
MARRIED PUT
Similar Strategies
Bear Put Spread and Bear Call Spread
Long Call
Disadvantage
Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads.
