Comparision (DIAGONAL BEAR PUT SPREAD
VS BULL PUT SPREAD)
Compare Strategies
DIAGONAL BEAR PUT SPREAD
BULL PUT SPREAD
About Strategy
Diagonal Bear Put Spread
When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk.
Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem ..
DIAGONAL BEAR PUT SPREAD Vs BULL PUT SPREAD - Details
DIAGONAL BEAR PUT SPREAD
BULL PUT SPREAD
Market View
Bearish
Bullish
Type (CE/PE)
PE (Put Option)
PE (Put Option)
Number Of Positions
2
2
Strategy Level
Beginners
Advance
Reward Profile
Limited
Limited
Risk Profile
Limited
Limited
Breakeven Point
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Strike price of short put - net premium paid
DIAGONAL BEAR PUT SPREAD Vs BULL PUT SPREAD - When & How to use ?
DIAGONAL BEAR PUT SPREAD
BULL PUT SPREAD
Market View
Bearish
Bullish
When to use?
When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset
Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.
Action
Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option
Buy OTM Put Option, Sell ITM Put Option
Breakeven Point
This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven.
Strike price of short put - net premium paid
DIAGONAL BEAR PUT SPREAD Vs BULL PUT SPREAD - Risk & Reward
DIAGONAL BEAR PUT SPREAD
BULL PUT SPREAD
Maximum Profit Scenario
'Premiums received - Initial premium to execute + Strike price - Stock Price on final month
Max Profit = Net Premium Received
Maximum Loss Scenario
When the stock trades up above the long-term put strike price.
Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received
Risk
Limited
Limited
Reward
Limited
Limited
DIAGONAL BEAR PUT SPREAD Vs BULL PUT SPREAD - Strategy Pros & Cons
DIAGONAL BEAR PUT SPREAD
BULL PUT SPREAD
Similar Strategies
Bear Put Spread and Bear Call Spread
Bull Call Spread, Bear Put Spread, Collar
Disadvantage
Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads.
• Limited profit potential. • In loss situations, time decay may go against you.
Advantages
The Risk is limited.
• Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk.
