PROTECTIVE PUT	CALL BACKSPREAD
About Strategy	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..	Call Backspread Option Trading  This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r .. Read more..

PROTECTIVE PUT Vs CALL BACKSPREAD - Details

	PROTECTIVE PUT	CALL BACKSPREAD
Market View	Bullish	Bullish
Type (CE/PE)	PE (Put Option)	CE (Call Option)
Number Of Positions	1	3
Strategy Level	Beginners	Advance
Reward Profile	Unlimited	Unlimited
Risk Profile	Limited	Limited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

PROTECTIVE PUT Vs CALL BACKSPREAD - When & How to use ?

	PROTECTIVE PUT	CALL BACKSPREAD
Market View	Bullish	Bullish
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	This strategy is used when the investor expects the price of the stock to rise in the future.
Action	Buy 1 ATM Put	Sell 1 ITM Call, BUY 2 OTM Call
Breakeven Point	Purchase Price of Underlying + Premium Paid	Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

PROTECTIVE PUT Vs CALL BACKSPREAD - Risk & Reward

	PROTECTIVE PUT	CALL BACKSPREAD
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Unlimited profit potential if the stock goes in upward direction.
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Strike Price of long call - Strike Price of short call - Net premium received
Risk	Limited	Limited
Reward	Unlimited	Unlimited

PROTECTIVE PUT Vs CALL BACKSPREAD - Strategy Pros & Cons

	PROTECTIVE PUT	CALL BACKSPREAD
Similar Strategies	Long Call, Call Backspread	-
Disadvantage	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.	• Unlimited profit potential.