Compare Strategies
BULL PUT SPREAD | RATIO PUT WRITE | |
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About Strategy |
Bull Put Spread Option StrategyBull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem |
Ratio Put Write Option StrategyThis strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in 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. .. |
BULL PUT SPREAD Vs RATIO PUT WRITE - Details
BULL PUT SPREAD | RATIO PUT WRITE | |
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Market View | Bullish | Neutral |
Type (CE/PE) | PE (Put Option) | PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Max Profit Achieved When Price of Underlying = Strike Price of Short Puts |
Risk Profile | Limited | Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received |
Breakeven Point | Strike price of short put - net premium paid | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
BULL PUT SPREAD Vs RATIO PUT WRITE - When & How to use ?
BULL PUT SPREAD | RATIO PUT WRITE | |
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Market View | Bullish | Neutral |
When to use? | Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. | This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future |
Action | Buy OTM Put Option, Sell ITM Put Option | Sell 2 ATM Puts |
Breakeven Point | Strike price of short put - net premium paid | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
BULL PUT SPREAD Vs RATIO PUT WRITE - Risk & Reward
BULL PUT SPREAD | RATIO PUT WRITE | |
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Maximum Profit Scenario | Max Profit = Net Premium Received | Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received | Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid |
Risk | Limited | Unlimited |
Reward | Limited | Limited |
BULL PUT SPREAD Vs RATIO PUT WRITE - Strategy Pros & Cons
BULL PUT SPREAD | RATIO PUT WRITE | |
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Similar Strategies | Bull Call Spread, Bear Put Spread, Collar | Short Strangle and Short Straddle |
Disadvantage | • Limited profit potential. • In loss situations, time decay may go against you. | • Potential loss is higher than gain. • Limited profit. |
Advantages | • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. |