Compare Strategies
LONG PUT BUTTERFLY | REVERSE IRON CONDOR | |
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About Strategy |
Long Put Butterfly Option StrategyThe Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. This strategy involves sale of 2 ATM Put Options, buy 1 ITM and 1 OTM Put Option. The risk and reward are limited. |
Reverse Iron Condor Option StrategyReverse Iron Condor as the name suggests is the opposite of Iron Condors. In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction. Here a trader will buy 1 OTM Call Option, sell 1 Deep OTM Call Option, buy 1 OTM Put Option, sell 1 Deep OTM Put Option. This strategy also .. |
LONG PUT BUTTERFLY Vs REVERSE IRON CONDOR - Details
LONG PUT BUTTERFLY | REVERSE IRON CONDOR | |
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Market View | Neutral | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 4 | 4 |
Strategy Level | Advance | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid |
LONG PUT BUTTERFLY Vs REVERSE IRON CONDOR - When & How to use ?
LONG PUT BUTTERFLY | REVERSE IRON CONDOR | |
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Market View | Neutral | Neutral |
When to use? | The Long Put Butterfly is a neutral strategy where a trader will be bearish on the volatility i.e. he thinks the market will have sideways kind of movement and will not rally sharply in either direction in the near future. | In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction |
Action | Buy 1 OTM Put, Sell 2 ATM Puts, Buy 1 ITM Put | Buy 1 OTM Put, Sell 1 OTM Put (Lower Strike), Buy 1 OTM Call, Sell 1 OTM Call (Higher Strike) |
Breakeven Point | Upper Breakeven Point = Strike Price of Highest Strike Long Put - Net Premium Paid, Lower Breakeven Point = Strike Price of Lowest Strike Long Put + Net Premium Paid | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid |
LONG PUT BUTTERFLY Vs REVERSE IRON CONDOR - Risk & Reward
LONG PUT BUTTERFLY | REVERSE IRON CONDOR | |
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Maximum Profit Scenario | Strike Price of Higher Strike Long Put - Strike Price of Short Put - Net Premium Paid - Commissions Paid | Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | When Price of Underlying <= Strike Price of Lower Strike Long Put OR Price of Underlying >= Strike Price of Higher Strike Long Put | Net Premium Paid + Commissions Paid |
Risk | Limited | Limited |
Reward | Limited | Limited |
LONG PUT BUTTERFLY Vs REVERSE IRON CONDOR - Strategy Pros & Cons
LONG PUT BUTTERFLY | REVERSE IRON CONDOR | |
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Similar Strategies | Iron Condors, Iron Butterfly | Short Condor |
Disadvantage | • Risk is higher than reward. • When the underlying price is in between the two breakeven points, time decay hurts the position. | • Potential loss is higher than gain. • Limited profit. |
Advantages | • Limited maximum loss. • Unlimited profit potential, risk only limited to loss of premium. • Benefits from low volatility. | • Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits. |