Compare Strategies
RISK REVERSAL | DIAGONAL BULL CALL SPREAD | |
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About Strategy |
Risk Reversal Option StrategyThis strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod |
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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RISK REVERSAL Vs DIAGONAL BULL CALL SPREAD - Details
RISK REVERSAL | DIAGONAL BULL CALL SPREAD | |
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Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Unlimited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Premium received - Put Strike Price |
RISK REVERSAL Vs DIAGONAL BULL CALL SPREAD - When & How to use ?
RISK REVERSAL | DIAGONAL BULL CALL SPREAD | |
---|---|---|
Market View | Bullish | Bullish |
When to use? | This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option. | |
Action | This strategy work when an investor want to hedge their position by buying a put option and selling a call option. | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call |
Breakeven Point | Premium received - Put Strike Price |
RISK REVERSAL Vs DIAGONAL BULL CALL SPREAD - Risk & Reward
RISK REVERSAL | DIAGONAL BULL CALL SPREAD | |
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Maximum Profit Scenario | You have unlimited profit potential to the upside. | |
Maximum Loss Scenario | You have nearly unlimited downside risk as well because you are short the put | |
Risk | Unlimited | Limited |
Reward | Unlimited | Limited |
RISK REVERSAL Vs DIAGONAL BULL CALL SPREAD - Strategy Pros & Cons
RISK REVERSAL | DIAGONAL BULL CALL SPREAD | |
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Similar Strategies | - | Bull Put Spread |
Disadvantage | Unlimited Risk. | |
Advantages | Unlimited profit. |