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Comparision (BEAR CALL SPREAD VS SHORT PUT)

 

Compare Strategies

  BEAR CALL SPREAD SHORT PUT
About Strategy

Bear Call Spread Option Strategy 

Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

BEAR CALL SPREAD Vs SHORT PUT - Details

BEAR CALL SPREAD SHORT PUT
Market View Bearish Bullish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 1
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Short Call + Net Premium Received Strike Price - Premium

BEAR CALL SPREAD Vs SHORT PUT - When & How to use ?

BEAR CALL SPREAD SHORT PUT
Market View Bearish Bullish
When to use? This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Buy OTM Call Option, Sell ITM Call Option Sell Put Option
Breakeven Point Strike Price of Short Call + Net Premium Received Strike Price - Premium

BEAR CALL SPREAD Vs SHORT PUT - Risk & Reward

BEAR CALL SPREAD SHORT PUT
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Unlimited (When the price of the underlying falls.)
Risk Limited Unlimited
Reward Limited Limited

BEAR CALL SPREAD Vs SHORT PUT - Strategy Pros & Cons

BEAR CALL SPREAD SHORT PUT
Similar Strategies Bear Put Spread, Bull Call Spread Bull Put Spread, Short Starddle
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges. • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

BEAR CALL SPREAD

SHORT PUT