Compare Strategies
| LONG CALL | STOCK REPAIR | |
|---|---|---|
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| About Strategy |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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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 CALL Vs STOCK REPAIR - Details
| LONG CALL | STOCK REPAIR | |
|---|---|---|
| Market View | Bullish | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 1 | 3 |
| Strategy Level | Beginner Level | Beginners |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike Price + Premium |
LONG CALL Vs STOCK REPAIR - When & How to use ?
| LONG CALL | STOCK REPAIR | |
|---|---|---|
| Market View | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) | Bullish |
| When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | 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 | Buying Call option | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Strike price + Premium |
LONG CALL Vs STOCK REPAIR - Risk & Reward
| LONG CALL | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | |
| Maximum Loss Scenario | Premium Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
LONG CALL Vs STOCK REPAIR - Strategy Pros & Cons
| LONG CALL | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Protective Put | |
| Disadvantage | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • 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. |