Comparision (STOCK REPAIR
VS NEUTRAL CALENDAR SPREAD)
Compare Strategies
STOCK REPAIR
NEUTRAL CALENDAR SPREAD
About Strategy
Stock Repair Option Strategy
Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery.
This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option, hence reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when the trader wants to make money from the ..
STOCK REPAIR Vs NEUTRAL CALENDAR SPREAD - When & How to use ?
STOCK REPAIR
NEUTRAL CALENDAR SPREAD
Market View
Bullish
Neutral
When to use?
Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery.
This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option.
• Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged.
• Lower profitability • Must have enough experience.
Advantages
• This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on.
• Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position.
