Compare Strategies
BEAR CALL SPREAD | PUT BACKSPREAD | |
---|---|---|
About Strategy |
Bear Call Spread Option StrategyBear 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 |
Put Backspread Option StrategyIf the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns. |
BEAR CALL SPREAD Vs PUT BACKSPREAD - Details
BEAR CALL SPREAD | PUT BACKSPREAD | |
---|---|---|
Market View | Bearish | Bearish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | |
Risk Profile | Limited | |
Breakeven Point | Strike Price of Short Call + Net Premium Received |
BEAR CALL SPREAD Vs PUT BACKSPREAD - When & How to use ?
BEAR CALL SPREAD | PUT BACKSPREAD | |
---|---|---|
Market View | Bearish | Bearish |
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. | |
Action | Buy OTM Call Option, Sell ITM Call Option | |
Breakeven Point | Strike Price of Short Call + Net Premium Received |
BEAR CALL SPREAD Vs PUT BACKSPREAD - Risk & Reward
BEAR CALL SPREAD | PUT BACKSPREAD | |
---|---|---|
Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | |
Risk | Limited | Limited |
Reward | Limited | Unlimited |
BEAR CALL SPREAD Vs PUT BACKSPREAD - Strategy Pros & Cons
BEAR CALL SPREAD | PUT BACKSPREAD | |
---|---|---|
Similar Strategies | Bear Put Spread, Bull Call Spread | |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | |
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. |