Compare Strategies
RATIO PUT SPREAD | BULL CALL SPREAD | |
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About Strategy |
Ratio Put Spread Option StrategyThis strategy involves buying ITM Puts and simultaneously selling OTM Puts, double the number of ITM Puts. 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. |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
RATIO PUT SPREAD Vs BULL CALL SPREAD - Details
RATIO PUT SPREAD | BULL CALL SPREAD | |
---|---|---|
Market View | Neutral | Bullish |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 3 | 2 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts) | Strike price of purchased call + net premium paid |
RATIO PUT SPREAD Vs BULL CALL SPREAD - When & How to use ?
RATIO PUT SPREAD | BULL CALL SPREAD | |
---|---|---|
Market View | Neutral | Bullish |
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. | This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. |
Action | Buy 1 ITM Put, Sell 2 OTM Puts | Buy ITM Call Option, Sell OTM Call Option |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts) | Strike price of purchased call + net premium paid |
RATIO PUT SPREAD Vs BULL CALL SPREAD - Risk & Reward
RATIO PUT SPREAD | BULL CALL SPREAD | |
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Maximum Profit Scenario | Strike Price of Long Put - Strike Price of Short Put + Net Premium Received - Commissions Paid | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid |
Maximum Loss Scenario | Strike Price of Short - Price of Underlying - Max Profit + Commissions Paid | Net Premium Paid |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
RATIO PUT SPREAD Vs BULL CALL SPREAD - Strategy Pros & Cons
RATIO PUT SPREAD | BULL CALL SPREAD | |
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Similar Strategies | Short Straddle (Sell Straddle), Short Strangle (Sell Strangle) | Collar |
Disadvantage | • Unlimited potential risk. • Limited profit. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
Advantages | • Directional strategy so that there is either no upside or downside risk. • Able to profit even if trader is neutral on the market. • Higher probability of profit. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |