When a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM
When a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM ..
BEAR PUT SPREAD Vs BEAR PUT SPREAD - When & How to use ?
BEAR PUT SPREAD
BEAR PUT SPREAD
Market View
Bearish
Bearish
When to use?
The bear call spread options strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
The bear call spread options strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action
Buy ITM Put Option, Sell OTM Put Option
Buy ITM Put Option, Sell OTM Put Option
Breakeven Point
Strike Price of Long Put - Net Premium
Strike Price of Long Put - Net Premium
BEAR PUT SPREAD Vs BEAR PUT SPREAD - Risk & Reward
BEAR PUT SPREAD
BEAR PUT SPREAD
Maximum Profit Scenario
Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid.
Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid.
Maximum Loss Scenario
Max Loss = Net Premium Paid.
Max Loss = Net Premium Paid.
Risk
Limited
Limited
Reward
Limited
Limited
BEAR PUT SPREAD Vs BEAR PUT SPREAD - Strategy Pros & Cons
BEAR PUT SPREAD
BEAR PUT SPREAD
Similar Strategies
Bear Call Spread, Bull Call Spread
Bear Call Spread, Bull Call Spread
Disadvantage
• Limited profit. • Early assignment risk.
• Limited profit. • Early assignment risk.
Advantages
• If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk.
• If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk.