Compare Strategies
| STOCK REPAIR | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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| About Strategy |
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 |
Christmas Tree Spread with Puts Option StrategyThis Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one put at strike price D, skipping strike price C, writes three calls at strike price B, and buying two calls at strike price A for same expiration dates for neutral to bearish forecast. An investor used this strategy to potential returns .. |
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Details
| STOCK REPAIR | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
|---|---|---|
| Market View | Bullish | Bearish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 6 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Lowest strike prices + the half premium – premium paid |
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - When & How to use ?
| STOCK REPAIR | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
|---|---|---|
| Market View | Bullish | Bearish |
| When to use? | 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. | This Strategy is used when an investor wants potential returns. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Buying one ATM, Selling 3 Puts, Buying one more OTM Put |
| Breakeven Point | Lowest strike prices + the half premium – premium paid |
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Risk & Reward
| STOCK REPAIR | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
|---|---|---|
| Maximum Profit Scenario | Equal middle strike price – higher strike price – the premium | |
| Maximum Loss Scenario | Net Debit paid for the strategy. | |
| Risk | Limited | Limited |
| Reward | Unlimited | Limited |
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Strategy Pros & Cons
| STOCK REPAIR | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
|---|---|---|
| Similar Strategies | Butterfly spreads | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Potential profit is lower or limited. |
| Advantages | • 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. | • The potential of loss is limited. |