STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (BEAR CALL SPREAD VS LONG STRADDLE)

 

Compare Strategies

  BEAR CALL SPREAD LONG STRADDLE
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

Long Straddle Option Strategy 

Straddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc ..

BEAR CALL SPREAD Vs LONG STRADDLE - Details

BEAR CALL SPREAD LONG STRADDLE
Market View Bearish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Beginners
Reward Profile Limited Unlimited
Risk Profile Limited Limited
Breakeven Point Strike Price of Short Call + Net Premium Received Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium

BEAR CALL SPREAD Vs LONG STRADDLE - When & How to use ?

BEAR CALL SPREAD LONG STRADDLE
Market View Bearish Neutral
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 options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action Buy OTM Call Option, Sell ITM Call Option Buy Call Option, Buy Put Option
Breakeven Point Strike Price of Short Call + Net Premium Received Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium

BEAR CALL SPREAD Vs LONG STRADDLE - Risk & Reward

BEAR CALL SPREAD LONG STRADDLE
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Max profit is achieved when at one option is exercised.
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Maximum Loss = Net Premium Paid
Risk Limited Limited
Reward Limited Unlimited

BEAR CALL SPREAD Vs LONG STRADDLE - Strategy Pros & Cons

BEAR CALL SPREAD LONG STRADDLE
Similar Strategies Bear Put Spread, Bull Call Spread Bear Put Spread
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges. • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen.
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. • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit.

BEAR CALL SPREAD

LONG STRADDLE