Compare Strategies
| LONG STRADDLE | STOCK REPAIR | |
|---|---|---|
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| About Strategy |
Long Straddle Option StrategyStraddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has .. |
LONG STRADDLE Vs STOCK REPAIR - Details
| LONG STRADDLE | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 3 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium |
LONG STRADDLE Vs STOCK REPAIR - When & How to use ?
| LONG STRADDLE | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations. | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. |
| Action | Buy Call Option, Buy Put Option | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium |
LONG STRADDLE Vs STOCK REPAIR - Risk & Reward
| LONG STRADDLE | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Max profit is achieved when at one option is exercised. | |
| Maximum Loss Scenario | Maximum Loss = Net Premium Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
LONG STRADDLE Vs STOCK REPAIR - Strategy Pros & Cons
| LONG STRADDLE | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Bear Put Spread | |
| Disadvantage | • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. |