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Comparision (DIAGONAL BULL CALL SPREAD VS LONG COMBO)

 

Compare Strategies

  DIAGONAL BULL CALL SPREAD LONG COMBO
About Strategy

Diagonal Bull Call Spread Option Strategy

This strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option.

Long Combo Option Strategy 

Long 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 ..

DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Details

DIAGONAL BULL CALL SPREAD LONG COMBO
Market View Bullish Bullish
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Advance
Reward Profile Limited Unlimited
Risk Profile Limited Unlimited
Breakeven Point Call Strike + Net Premium

DIAGONAL BULL CALL SPREAD Vs LONG COMBO - When & How to use ?

DIAGONAL BULL CALL SPREAD LONG COMBO
Market View Bullish Bullish
When to use? 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 Long-Term ITM Call Sell 1 Near-Term OTM Call Sell OTM Put Option, Buy OTM Call Option
Breakeven Point Call Strike + Net Premium

DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Risk & Reward

DIAGONAL BULL CALL SPREAD 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 Limited Unlimited

DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Strategy Pros & Cons

DIAGONAL BULL CALL SPREAD LONG COMBO
Similar Strategies Bull Put Spread -
Disadvantage • Losses can keep on increasing as the price of stock goes down. • High risk strategy.
Advantages • 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.

DIAGONAL BULL CALL SPREAD

LONG COMBO