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Comparision (BULL PUT SPREAD VS CALL BACKSPREAD)

 

Compare Strategies

  BULL PUT SPREAD CALL BACKSPREAD
About Strategy

Bull Put Spread Option Strategy

Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem

Call Backspread Option Trading 

This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r ..

BULL PUT SPREAD Vs CALL BACKSPREAD - Details

BULL PUT SPREAD CALL BACKSPREAD
Market View Bullish Bullish
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Advance Advance
Reward Profile Limited Unlimited
Risk Profile Limited Limited
Breakeven Point Strike price of short put - net premium paid Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

BULL PUT SPREAD Vs CALL BACKSPREAD - When & How to use ?

BULL PUT SPREAD CALL BACKSPREAD
Market View Bullish Bullish
When to use? Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. This strategy is used when the investor expects the price of the stock to rise in the future.
Action Buy OTM Put Option, Sell ITM Put Option Sell 1 ITM Call, BUY 2 OTM Call
Breakeven Point Strike price of short put - net premium paid Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss

BULL PUT SPREAD Vs CALL BACKSPREAD - Risk & Reward

BULL PUT SPREAD CALL BACKSPREAD
Maximum Profit Scenario Max Profit = Net Premium Received Unlimited profit potential if the stock goes in upward direction.
Maximum Loss Scenario Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received Strike Price of long call - Strike Price of short call - Net premium received
Risk Limited Limited
Reward Limited Unlimited

BULL PUT SPREAD Vs CALL BACKSPREAD - Strategy Pros & Cons

BULL PUT SPREAD CALL BACKSPREAD
Similar Strategies Bull Call Spread, Bear Put Spread, Collar -
Disadvantage • Limited profit potential. • In loss situations, time decay may go against you.
Advantages • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. • Unlimited profit potential.

BULL PUT SPREAD

CALL BACKSPREAD