STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (IRON CONDORS VS RATIO PUT WRITE)

 

Compare Strategies

  IRON CONDORS RATIO PUT WRITE
About Strategy

Iron Condors Option Strategy

Iron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option.

Ratio Put Write Option Strategy 

This strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. ..

IRON CONDORS Vs RATIO PUT WRITE - Details

IRON CONDORS RATIO PUT WRITE
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) PE (Put Option)
Number Of Positions 4 2
Strategy Level Advance Beginners
Reward Profile Limited Max Profit Achieved When Price of Underlying = Strike Price of Short Puts
Risk Profile Limited Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received
Breakeven Point Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit

IRON CONDORS Vs RATIO PUT WRITE - When & How to use ?

IRON CONDORS RATIO PUT WRITE
Market View Neutral Neutral
When to use? When a trader tries to make profit from low volatility in the price of the underlying asset. This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future
Action Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 1 OTM Call (Higher Strike) Sell 2 ATM Puts
Breakeven Point Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit

IRON CONDORS Vs RATIO PUT WRITE - Risk & Reward

IRON CONDORS RATIO PUT WRITE
Maximum Profit Scenario Net Premium Received - Commissions Paid Net Premium Received - Commissions Paid
Maximum Loss Scenario Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid
Risk Limited Unlimited
Reward Limited Limited

IRON CONDORS Vs RATIO PUT WRITE - Strategy Pros & Cons

IRON CONDORS RATIO PUT WRITE
Similar Strategies Long Put Butterfly, Neutral Calendar Spread Short Strangle and Short Straddle
Disadvantage • Full of risk. • Unlimited maximum loss. • Potential loss is higher than gain. • Limited profit.
Advantages • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price.

IRON CONDORS

RATIO PUT WRITE