Compare Strategies
| SHORT CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
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| About Strategy |
Short Call Butterfly Option StrategyThis strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly. If the trader is bullish on the market’s volatility, he will implement this strategy. Here also there should be equal distance between the |
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 .. |
SHORT CALL BUTTERFLY Vs STOCK REPAIR - Details
| SHORT CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 4 | 3 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium |
SHORT CALL BUTTERFLY Vs STOCK REPAIR - When & How to use ?
| SHORT CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc. | 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. |
| Action | Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium |
SHORT CALL BUTTERFLY Vs STOCK REPAIR - Risk & Reward
| SHORT CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | The profit is limited to the net premium received. | |
| Maximum Loss Scenario | Higher strike price- Lower Strike Price - Net Premium | |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
SHORT CALL BUTTERFLY Vs STOCK REPAIR - Strategy Pros & Cons
| SHORT CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Long Straddle, Long Call Butterfly | |
| Disadvantage | • Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Even if the market is highly volatile, the risk exposure remains limited. • Without any extra investment, you can receive your premium. • Able to book profits even when the price movement cannot be predicted. | • 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. |