Comparision (STOCK REPAIR
VS CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY)
Compare Strategies
STOCK REPAIR
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
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 an advance option strategy that consists of three legs and six total options. In this strategy buying one call at strike price A, skipping strike price B, writes three calls at strike price C, and buying two calls at strike price D for same expiration dates for neutral to bullish forecast. An investor used this strategy to potential retur ..
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Details
STOCK REPAIR
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Market View
Bullish
Bullish
Type (CE/PE)
CE (Call Option)
CE (Call Option)
Number Of Positions
3
4
Strategy Level
Beginners
Advance
Reward Profile
Unlimited
Limited
Risk Profile
Limited
Limited
Breakeven Point
Lowest strike prices + premium paid – the half premium.
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - When & How to use ?
STOCK REPAIR
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Market View
Bullish
Bullish
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 used when an investor wants potential returns.
Action
Buy 1 ATM Call, Sell 2 OTM Calls
• Buy 1 call , • Sell 3 calls, • Buy 2 calls
Breakeven Point
Lowest strike prices + premium paid – the half premium.
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Risk & Reward
STOCK REPAIR Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Strategy Pros & Cons
STOCK REPAIR
CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY
Similar Strategies
CHRISTMAS TREE SPREAD WITH PUT OPTION
Disadvantage
• Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged.
• Potential profit is lower or limited.
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.
