STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (DIAGONAL BULL CALL SPREAD VS RATIO CALL WRITE)

 

Compare Strategies

  DIAGONAL BULL CALL SPREAD RATIO CALL WRITE
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.

Ratio Call Write Option Strategy 

This strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited.

DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Details

DIAGONAL BULL CALL SPREAD RATIO CALL WRITE
Market View Bullish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 2 2
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - When & How to use ?

DIAGONAL BULL CALL SPREAD RATIO CALL WRITE
Market View Bullish Neutral
When to use? This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call Sell 2 ATM Calls
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Risk & Reward

DIAGONAL BULL CALL SPREAD RATIO CALL WRITE
Maximum Profit Scenario Net Premium Received - Commissions Paid
Maximum Loss Scenario Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid
Risk Limited Unlimited
Reward Limited Limited

DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Strategy Pros & Cons

DIAGONAL BULL CALL SPREAD RATIO CALL WRITE
Similar Strategies Bull Put Spread Variable Ratio Write
Disadvantage • Potential loss is higher than gain. • Limited profit.
Advantages

DIAGONAL BULL CALL SPREAD

RATIO CALL WRITE