Compare Strategies
DIAGONAL BEAR PUT SPREAD | BEAR PUT SPREAD | |
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About Strategy |
Diagonal Bear Put SpreadWhen 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. |
Bear Put Spread Option StrategyWhen a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM .. |
DIAGONAL BEAR PUT SPREAD Vs BEAR PUT SPREAD - Details
DIAGONAL BEAR PUT SPREAD | BEAR PUT SPREAD | |
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Market View | Bearish | Bearish |
Type (CE/PE) | PE (Put Option) | PE (Put Option) |
Number Of Positions | 2 | 2 |
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. | Strike Price of Long Put - Net Premium |
DIAGONAL BEAR PUT SPREAD Vs BEAR PUT SPREAD - When & How to use ?
DIAGONAL BEAR PUT SPREAD | BEAR PUT SPREAD | |
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Market View | Bearish | Bearish |
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 | The bear call spread options 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. |
Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buy ITM Put Option, Sell OTM Put Option |
Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike Price of Long Put - Net Premium |
DIAGONAL BEAR PUT SPREAD Vs BEAR PUT SPREAD - Risk & Reward
DIAGONAL BEAR PUT SPREAD | BEAR PUT SPREAD | |
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Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid. |
Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Max Loss = Net Premium Paid. |
Risk | Limited | Limited |
Reward | Limited | Limited |
DIAGONAL BEAR PUT SPREAD Vs BEAR PUT SPREAD - Strategy Pros & Cons
DIAGONAL BEAR PUT SPREAD | BEAR PUT SPREAD | |
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Similar Strategies | Bear Put Spread and Bear Call Spread | Bear Call Spread, Bull Call Spread |
Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • Limited profit. • Early assignment risk. |
Advantages | The Risk is limited. | • If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk. |