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Comparision (DIAGONAL BULL CALL SPREAD VS SHORT STRADDLE)

 

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  DIAGONAL BULL CALL SPREAD SHORT STRADDLE
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.

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..

DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Details

DIAGONAL BULL CALL SPREAD SHORT STRADDLE
Market View Bullish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - When & How to use ?

DIAGONAL BULL CALL SPREAD SHORT STRADDLE
Market View Bullish Neutral
When to use? This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call Sell Call Option, Sell Put Option
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Risk & Reward

DIAGONAL BULL CALL SPREAD SHORT STRADDLE
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Limited Unlimited
Reward Limited Limited

DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Strategy Pros & Cons

DIAGONAL BULL CALL SPREAD SHORT STRADDLE
Similar Strategies Bull Put Spread Short Strangle
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

DIAGONAL BULL CALL SPREAD

SHORT STRADDLE