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Comparision (RISK REVERSAL VS DIAGONAL BULL CALL SPREAD)

 

Compare Strategies

  RISK REVERSAL DIAGONAL BULL CALL SPREAD
About Strategy

Risk Reversal Option Strategy

This 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 Strategy

This 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 REVERSAL Vs DIAGONAL BULL CALL SPREAD - Details

RISK REVERSAL DIAGONAL BULL CALL SPREAD
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
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
Similar Strategies - Bull Put Spread
Disadvantage Unlimited Risk.
Advantages Unlimited profit.

RISK REVERSAL

DIAGONAL BULL CALL SPREAD