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Comparision (IRON CONDORS VS RATIO CALL WRITE)

 

Compare Strategies

  IRON CONDORS RATIO CALL WRITE
About Strategy

Iron Condors Option Strategy

Iron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option.

Ratio Call Write Option Strategy 

This strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. 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.

IRON CONDORS Vs RATIO CALL WRITE - Details

IRON CONDORS RATIO CALL WRITE
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option)
Number Of Positions 4 2
Strategy Level Advance Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

IRON CONDORS Vs RATIO CALL WRITE - When & How to use ?

IRON CONDORS RATIO CALL WRITE
Market View Neutral Neutral
When to use? When a trader tries to make profit from low volatility in the price of the underlying asset. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 1 OTM Call (Higher Strike) Sell 2 ATM Calls
Breakeven Point Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

IRON CONDORS Vs RATIO CALL WRITE - Risk & Reward

IRON CONDORS RATIO CALL WRITE
Maximum Profit Scenario Net Premium Received - Commissions Paid Net Premium Received - Commissions Paid
Maximum Loss Scenario Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid
Risk Limited Unlimited
Reward Limited Limited

IRON CONDORS Vs RATIO CALL WRITE - Strategy Pros & Cons

IRON CONDORS RATIO CALL WRITE
Similar Strategies Long Put Butterfly, Neutral Calendar Spread Variable Ratio Write
Disadvantage • Full of risk. • Unlimited maximum loss. • Potential loss is higher than gain. • Limited profit.
Advantages • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price.

IRON CONDORS

RATIO CALL WRITE