Compare Strategies
| STOCK REPAIR | BULL CALL SPREAD | |
|---|---|---|
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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 |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
STOCK REPAIR Vs BULL CALL SPREAD - Details
| STOCK REPAIR | BULL CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike price of purchased call + net premium paid |
STOCK REPAIR Vs BULL CALL SPREAD - When & How to use ?
| STOCK REPAIR | BULL CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bullish |
| 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 is Bullish in the market but expect the underlying to gain mildly in near future. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Buy ITM Call Option, Sell OTM Call Option |
| Breakeven Point | Strike price of purchased call + net premium paid |
STOCK REPAIR Vs BULL CALL SPREAD - Risk & Reward
| STOCK REPAIR | BULL CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid | |
| Maximum Loss Scenario | Net Premium Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Limited |
STOCK REPAIR Vs BULL CALL SPREAD - Strategy Pros & Cons
| STOCK REPAIR | BULL CALL SPREAD | |
|---|---|---|
| Similar Strategies | Collar | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
| 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. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |