RISK REVERSAL	SHORT CALL BUTTERFLY
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 Read more..	Short Call Butterfly Option Strategy This 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 .. Read more..

RISK REVERSAL Vs SHORT CALL BUTTERFLY - Details

	RISK REVERSAL	SHORT CALL BUTTERFLY
Market View	Bullish	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	2	4
Strategy Level	Advance	Advance
Reward Profile	Unlimited	Limited
Risk Profile	Unlimited	Limited
Breakeven Point	Premium received - Put Strike Price	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

RISK REVERSAL Vs SHORT CALL BUTTERFLY - When & How to use ?

	RISK REVERSAL	SHORT CALL BUTTERFLY
Market View	Bullish	Neutral
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.	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.
Action	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.	Buy 2 ATM Call, Sell 1 ITM Call, Sell 1 OTM Call
Breakeven Point	Premium received - Put Strike Price	Lower Break-even = Lower Strike Price + Net Premium, Upper Break-even = Higher Strike Price - Net Premium

RISK REVERSAL Vs SHORT CALL BUTTERFLY - Risk & Reward

	RISK REVERSAL	SHORT CALL BUTTERFLY
Maximum Profit Scenario	You have unlimited profit potential to the upside.	The profit is limited to the net premium received.
Maximum Loss Scenario	You have nearly unlimited downside risk as well because you are short the put	Higher strike price- Lower Strike Price - Net Premium
Risk	Unlimited	Limited
Reward	Unlimited	Limited

RISK REVERSAL Vs SHORT CALL BUTTERFLY - Strategy Pros & Cons

	RISK REVERSAL	SHORT CALL BUTTERFLY
Similar Strategies	-	Long Straddle, Long Call Butterfly
Disadvantage	Unlimited Risk.	• Limited rewards, usually offer smaller return. • Profitability depends on the significant movement of stocks and options prices.
Advantages	Unlimited profit.	• 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.