Compare Strategies
| DIAGONAL BEAR PUT SPREAD | MARRIED PUT | |
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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. |
Married Put Option StrategyThis 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 .. |
DIAGONAL BEAR PUT SPREAD Vs MARRIED PUT - Details
| DIAGONAL BEAR PUT SPREAD | MARRIED PUT | |
|---|---|---|
| Market View | Bearish | Bullish |
| Type (CE/PE) | PE (Put Option) | PE (Put Option) |
| Number Of Positions | 2 | 1 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Unlimited |
| 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. | 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. | Cost of the put options eats into profit margin. |
| Advantages | The Risk is limited. | Unlimited Profit and Limited Risk |