Compare Strategies
DIAGONAL BULL CALL SPREAD | RATIO CALL WRITE | |
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About Strategy |
Diagonal Bull Call Spread Option StrategyThis strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option. Risk:
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Ratio Call Write Option StrategyThis 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.
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DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Details
DIAGONAL BULL CALL SPREAD | RATIO CALL WRITE | |
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Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit |
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - When & How to use ?
DIAGONAL BULL CALL SPREAD | RATIO CALL WRITE | |
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Market View | Bullish | Neutral |
When to use? | This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Sell 2 ATM Calls |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit |
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Risk & Reward
DIAGONAL BULL CALL SPREAD | RATIO CALL WRITE | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | |
Maximum Loss Scenario | 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 |
DIAGONAL BULL CALL SPREAD Vs RATIO CALL WRITE - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | RATIO CALL WRITE | |
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Similar Strategies | Bull Put Spread | Variable Ratio Write |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | |
Advantages |