Comparision (DIAGONAL BEAR PUT SPREAD
VS REVERSE IRON CONDOR)
Compare Strategies
DIAGONAL BEAR PUT SPREAD
REVERSE IRON CONDOR
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.
Reverse Iron Condor as the name suggests is the opposite of Iron Condors. In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction. Here a trader will buy 1 OTM Call Option, sell 1 Deep OTM Call Option, buy 1 OTM Put Option, sell 1 Deep OTM Put Option. This strategy also ..
DIAGONAL BEAR PUT SPREAD Vs REVERSE IRON CONDOR - Details
DIAGONAL BEAR PUT SPREAD
REVERSE IRON CONDOR
Market View
Bearish
Neutral
Type (CE/PE)
PE (Put Option)
CE (Call Option) + PE (Put Option)
Number Of Positions
2
4
Strategy Level
Beginners
Advance
Reward Profile
Limited
Limited
Risk Profile
Limited
Limited
Breakeven Point
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid
DIAGONAL BEAR PUT SPREAD Vs REVERSE IRON CONDOR - When & How to use ?
DIAGONAL BEAR PUT SPREAD
REVERSE IRON CONDOR
Market View
Bearish
Neutral
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
In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction
Action
Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid
DIAGONAL BEAR PUT SPREAD Vs REVERSE IRON CONDOR - Risk & Reward
DIAGONAL BEAR PUT SPREAD
REVERSE IRON CONDOR
Maximum Profit Scenario
'Premiums received - Initial premium to execute + Strike price - Stock Price on final month
Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid
Maximum Loss Scenario
When the stock trades up above the long-term put strike price.
Net Premium Paid + Commissions Paid
Risk
Limited
Limited
Reward
Limited
Limited
DIAGONAL BEAR PUT SPREAD Vs REVERSE IRON CONDOR - Strategy Pros & Cons
DIAGONAL BEAR PUT SPREAD
REVERSE IRON CONDOR
Similar Strategies
Bear Put Spread and Bear Call Spread
Short Condor
Disadvantage
Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads.
• Potential loss is higher than gain. • Limited profit.
Advantages
The Risk is limited.
• Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits.
